Pollution Liability Insurance and Catastrophic Environmental Risk

Abstract

Public concern with catastrophic consequences of chemical releases into the environment resulted in the passage of RCRA and Superfund legislation, which establish financial responsibility requirements. These acts encourage the creation of a market in pollution liability insurance for purposes of risk spreading, safety regulation, and victim compensation. This article analyzes policy alternatives for regulating catastrophic risks, the insurability of pollution liabilities, factors contributing to the rise and fall of the market, and conditions under which markets could be resuscitated.