The country's top environmental watchdog and insurance regulator will jointly promote insurance for polluters and help expedite compensation for victims, officials said Monday.
"This is the second step after the introduction of green credits to use market instruments to treat environmental problems," Pan Yue, deputy director of the State Environmental Protection Administration (SEPA), said.
The latest pollution liability insurance policy, to be put in place in 2015, covers the clean up of environmental accidents and indemnifies the insured from pollution treatment costs, officials said.
Insurance products in a trial phase will be promoted to three types of plants with high risks of environmental pollution mishaps - hazardous chemical plants involved in production, selling, storage and transportation, petrochemical plants and hazardous waste treatment plants.
"There has been a high frequency of environmental accidents in the country," Pan said.
"Last year, there was one accident taking place every two days.
"Without pollution liability insurance, the culprits could not compensate victims and conduct cleanups, generating social instability," he said.
The pollution liability insurance will provide a solution that benefits the authorities, plants and residents, Pan said.
With the insurance scheme, the authorities will be able to alleviate any financial burden from such pollution, Pan said. Plants can also avoid going bankrupt with indemnities while residents can also get compensated for suffering any pollution.
"It is a win-win solution," Pan said.
Dong Bo, an official with the China Insurance Regulatory Commission (CIRC), also said the commission will work with SEPA and insurance companies to develop insurance products and set up standards for claims.
Dong said insurer Huatai Insurance, based in Beijing, has started to develop such products for sale.
He urged potential polluters to seriously consider such insurance to protect themselves against accidents.
Bie Tao, director of the policy, law and regulation department of SEPA, said a survey last year by SEPA and the CIRC showed that most enterprises were not active in buying such green insurance because of the costs involved. "SEPA will consider bundling the insurance with other environmental protection regulations," Bie said.
"For example, SEPA will list the purchase of such insurance as prerequisites for proving the environmental impact assessment of projects or in allocating pollution discharge licenses."