Financial Guarantees at European Insurance Solutions

Financial Guarantees

During the last decades the polluter pays principle (PPP) has been the main political tool used to prevent and remediate damage to the environment. The principle was enacted to make the party responsible for having caused negative impacts on the environment responsible for paying for the damages.

The principle has successfully helped to reduce negative impacts on the environment, e.g. by supporting the implementation of environmental taxes (also known as ecotaxes) and the principle of extended producer responsibility (EPR). The principle of extended producer responsibility was enacted with the aim of internalising the costs of waste disposal into the cost of products, providing economic incentives for producers to improve the waste profile of their products and thus lowering the environmental impact throughout their life-cycles.

The polluter pays principle and the principle of extended producer responsibility may however fail to protect the environment if the polluter goes bankrupt or cease to exist. Therefore decision makers are gradually demanding that “polluters” set up financial guarantees to ensure that the environment is protected at all times. The disadvantages of not having financial assurance provisions has rapidly gained attention in the political sphere and further strengthening of such policies is certainly on an upwards trend.

A financial guarantee may be in the form of an insurance, a bank guarantee, money in a closed bank account or other irrevocable agreements. However financial guarantees provided for by traditional financial institutions are often inflexible, costly and risky. EIS has therefore specialized in custom insurance solutions that provide coverage of risks which are neither available nor offered by traditional financial institutions at reasonable prices. To find out more, read more about our business and the advantages of our PCC structure.