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Insurers create their own lexicon.

the American aficionados of Pliability policy wordings, here is an amusing and perhaps instructive look at the muddle insurers on the other side of the Atlantic are getting themselves into over liability wordings. First, insurers in the United Kingdom are coming to terms, or depending on your viewpoint, floundering in the mire, over the distinction between "pollution" and environmental impairment." Second, a new policy is being put together to underwrite "gradual pollution." Or is it "gradual environmental impairment"? As for the distinction between pollution and environmental impairment, according to a spokesman from Swiss Re, the latter is "the intermediary between the emission of some harmful agent into or upon the soil, atmosphere or a body of water and the consequent injury or damage to persons or tangible property or any legal rights." "Environmental impairment only takes place if there is a change in the natural state or condition of the soil, the atmosphere or the water," he says. "What is decisive is the difference between the state or condition prior to and after the emission, not the difference compared to the 'pure' original composition....Pollution, however, takes place without changing the state of the soil, atmosphere or water, and it is this fundamental difference that creates much of the difficulty. We now embrace noise and many other things with the term pollution, so that some of the suitable subjects for cover under a general third-party policy are swept up with the genuine concerns of reinsurers over the environmental issues and the sudden versus gradual scenario that attention seems ultimately to focus upon." What I say, apropos of the Swiss Re view, is that as far as the English language is concerned there is no difference in meaning. Environmental impairment is American English for pollution; its use follows the American language principle that wherever two or three vague abstract words with a Latin origin can be substituted for a single forceful word which conjures up an image of the thing it describes, it should be done. I should add, in mitigation of my criticism of Americans' abuse of the language, that we Europeans have caught up now and are quite capable of leading the way in the future.

The purpose of the Swiss Re spokeman's definition was to promote confidence, which, he says, grows "from defining the extent of cover-having a clear point in time when the cover is triggered and a known limit of liability. 'Claims made' and 'aggregate limits' are, therefore, the order of the day."

The debate over whether there is a difference between pollution and environmental impairment, what is the difference, if it exists, and what are the implications of the distinction are matters about which millions of words may be written in the future. I merely want to point out one possible implication of Swiss Re's distinction.

Recently, broker Willis Faber and the United Kingdom's Chemical Industries Association announced that they had arranged a new insurance facility to be underwritten by a panel of insurers led by Swiss Re. It would provide association members with "a level of legal liability protection for pollution and environmental claims not normally available from the insurance market."

That the planned coverage is for gradual---not sudden and accidental---is an interesting development in the market, but not the point I am drawing attention to. What interests me is that the promotional material for the new facility talks of cover for both pollution and environmental claims.

Three questions come to mind: Are both terms "pollution" and "environmental" employed because they are synonymous? Or are they there because Swiss Re consciously intends to offer coverage for both, according to the terms defined by the Swiss Re spokesman? Or are they simply there by mistake, because there is general confusion as to their proper meaning and use?

It would be interesting to know whether Swiss Re really intends to cover noise and the like, as pollution claims do. This, after all, would seem to be what the spokesman implied with his definition. It does not matter that he thought he was doing his company a good turn when he drew this distinction. This is another example of the problems insurers invariably create for themselves when they try to cope with something they do not understand: the English language.
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Title Annotation:pollution insurance policies
Author:Best, Chris F.
Publication:Risk Management
Article Type:column
Date:Feb 1, 1990
Previous Article:Consumerism: a force to be reckoned with?
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