Shipping firms given break from spills

(China Daily)
Updated: 2009-08-20 09:34

SHANGHAI: Shipping companies could be forced to take out insurance against pollution spills under a draft law under debate in the largest city in China.

Polluters would purchase liability insurance, under the law, in the event that a spill or other environmentally damaging incident should occur. Insurance companies would then help compensate for losses.

It has not yet been decided whether companies would be forced or simply encouraged to buy insurance.

Pollution into the waterway from ship collisions is the greatest safety threat to Shanghai's primary drinking water source located at the upper reaches of the Huangpu River, according to a recent investigation. Compensation for spills usually exceeds the financial capability of shipping companies involved in a spill.

The recent report by the Urban Environmental Protection Committee under the municipal people's congress found that more than 800 spills or other polluting incidents occurred in the city's waterways from 1984 to 2005. The average of 40 spills per year is posing a "serious threat" to water safety.

The committee is currently deliberating on the draft law. It's uncertain when they will decide on the proposed law and when the law will be put into effect.

The introduction of insurance regulation will likely reduce the financial risks for ship companies, and ensure that environmental accidents be dealt with in a timely manner, said committee member Mao Wenpei.

"Insurance companies are in a much better position to pay for the damages than polluters, many of which are small and medium-sized, less experienced and cannot afford huge compensations," said Mao.

Zhou Xiaokang, director of the safety management department of China Shipping Group Company, said he welcomes the law and said it represents a step forward in better protections for water safety in inland rivers. Still, he also said that authorities would find it difficult to receive support from small shipping companies.

"Small companies won't be willing to pay for the insurance," he said. "Even when an accident occurs, they would shirk the responsibility."

Shanghai's draft law is timely: Water pollution risks are increasing across China, where the government is mostly the key source of compensation for unaccountable accidents. The increasing risks associated with water pollution have brought up the call for better crisis management in times of an emergency.