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ROLE OF INSURANCE INDUSTRY IN MANAGEMENT OF ENVIRONMENTAL RISK

CHAPTER ONE

INTRODUCTION

Background of the Study

The insurance industry plays a crucial role in mitigating and managing various risks faced by businesses and societies. One critical area where insurance has increasingly become significant is in the management of environmental risks. Environmental risks encompass a wide range of challenges, including natural disasters, pollution incidents, climate change impacts, and ecosystem degradation. These risks can have profound effects on businesses, communities, and the environment itself, necessitating effective risk management strategies.

In every Environment various activities carried out by man has caused a lot of hazard, to man, this environmental activities constitute health hazard to environment, such environment is in an organization setting like insurance industry. The hazard has resulted to a lot of sickness, disease, death etc to the inhabitant. Public nuisance for the inhabitant is been resulted form noise of machines. The management of risk in the environment has adopted by various government and private organs on managing the risk of the said environment.  In this aspect there are some activities in the environment which brought about pollution on different forms which causes damages to the health.

We can understand that security protection is the right of citizens. Good health is better than wealth. A health nation is a wealthy nation, In the production industry and others, most of the activities result to health hazards which constitute some wounds to workers through accident and inadequate protect resulting form improper risk management. It is also necessary to evaluate the expected role of adequate risk management through the help of insurance industries and its services like accident insurance, Health insurance, fire insurance, fidelity insurance etc. in order to reduce the loss and compensate those affected.

Statement of the Problem

Despite the growing recognition of environmental risks, there remains a gap in understanding how the insurance industry specifically contributes to their management. This study aims to explore and elucidate the role of the insurance industry in addressing environmental risks comprehensively.

Objectives of the Study

The main objective of this study is to determine the role of the insurance industry in the management of environmental risk. Specific objectives include:

i. To evaluate the impact of insurance policies and products on mitigating environmental risks. ii. To determine the effectiveness of insurance mechanisms in promoting environmental sustainability. iii. To find out the challenges faced by the insurance industry in managing environmental risks.

Research Questions

i. What is the impact of insurance policies and products in mitigating environmental risks? ii. What is the effectiveness of insurance mechanisms in promoting environmental sustainability? iii. How does the insurance industry address the challenges associated with managing environmental risks?

Significance of the Study

This study is significant as it provides insights into how the insurance industry contributes to environmental risk management, thereby enhancing resilience and sustainability efforts. It will inform policymakers, insurers, businesses, and environmental stakeholders about the potential of insurance in addressing environmental challenges.

Scope of the Study

This study will focus on the role of the insurance industry in managing environmental risks globally, with a particular emphasis on policies, products, and practices that contribute to risk mitigation and adaptation strategies.

Limitations of the Study

Limitations may include the availability of comprehensive data on insurance industry practices specific to environmental risk management, varying regulatory environments across different regions, and the complexity of assessing long-term environmental impacts.

Definition of Terms

Environmental Risks: Potential adverse effects on the environment arising from human activities, natural disasters, or climate change.

Insurance Industry: Sector comprising companies that provide insurance policies and products to individuals, businesses, and organizations.

Risk Management: Processes and strategies employed to identify, assess, and mitigate risks effectively.