Proposed environment insurance bad for business

MANILA, Philippines – The local business community is concerned a proposed House bill on environment insurance would serve as a roadblock in the ease of doing business in the country.

The Philippine Exporters Confederation Inc. (Philexport), along with the local business sector, has expressed reservations about a draft legislative bill requiring environmentally critical businesses to secure environment insurance coverage. Industry stakeholders said there are already enough measures in place to cover the cost of possible ecological damage arising from business operations.

House Bill No. 5485 entitled “An Act Requiring Mandatory Environment Insurance Coverage (MEIC) for Environmentally Critical Businesses” is co-authored by Representatives Rosenda Ann Ocampo and Amado Bagatsing.

The MEIC “seeks to require owners and operators of environmentally-critical businesses to secure a mandatory environmental insurance coverage for the payment of damages and environmental rehabilitation as a result of environmental impairment from its operations.”

Philexport said local business groups believe the proposed MEIC would add another layer to the “already cumbersome documentary requirements for registration and doing business in the country.”

In the World Bank Group’s 2016 edition of its “Doing Business Report,” Philexport said the Philippines has already slipped six notches to 103rd from last year’s 97th spot in terms of ease of doing business.

The group said the proposed bill would run counter to government’s effort in streamlining the process of doing business in the country.

Philexport and the Philippine Chamber of Commerce and Industry (PCCI) explained that while mechanisms for environmental protection are necessary, the MEIC is redundant given the Philippine environmental impact statement system, the environmental guarantee fund (EGF), and similar mechanisms which are already required to be created to address concerns over environmental preservation.

Both organizations added the Department of Environment and Natural Resources (DENR) already mandates an EGF for projects the agency determines as posing “a significant public risk or where the project requires rehabilitation or restoration.”

“With DAO 2003-03, the DENR has already established the power and authority to sanction any entity they find to be violating the law,” PCCI said.

The PCCI is also questioning Section 3 of the proposed bill which makes MEIC a prerequisite for the issuance of the environmental compliance certificate or certificate of noncoverage.

PCCI is calling for further studies to determine if the Philippine insurance industry has the financial and technical capacity to implement the environmental insurance coverage.

“We should likewise benchmark with our neighboring countries in Asia if MEIC is being implemented,” it said.

Philexport said among the other major concerns of enterprises about the proposal is how much would  the insurance premium be considering that small firms do not have the financial capacity that large corporations have.