Mandatory insurance can ensure companies pay for polluting

ON FRIDAY, the Ministry of Environmental Protection and China Insurance Regulatory Commission jointly issued a draft regulation for public opinions, which requires all polluting enterprises to buy mandatory environmental pollution responsibility insurance. An editorial in Southern Metropolis Daily comments:

The mandatory environmental pollution responsibility insurance means an enterprise pays for insurance to cover any liabilities resulting from its polluting, including compensation payouts and the cost for rehabilitating the environment.

According to the Ministry of Environmental Protection, in certain past incidents, the polluting enterprises did not have enough funds to compensate the victims and pay for the environmental recovery costs. As a result, the government had to pay for the cleanup work and the victims were often left uncompensated. With the new insurance, such a situation could be avoided. Such insurance has proved quite effective in developed countries.