In July 2021, the Shenzhen Municipal Bureau of Ecology and Environment and the China Banking and Insurance Regulatory Commission Shenzhen Supervision Bureau issued the "Shenzhen Environmental Pollution Compulsory Liability Insurance Implementation Measures", which will be implemented on July 1. Compulsory pollution liability insurance refers to the compulsory insurance that takes the compensation liability that enterprises, institutions and other producers and business operators (hereinafter referred to as “units]) should bear for damages caused by environmental pollution as the subject matter of insurance. In addition to clarifying the scope of implementation and insurance responsibilities, the measures also clarify the responsibilities and obligations of insurance companies and insurance companies in the process of insurance application and underwriting.

The measures require the following units to purchase compulsory environmental pollution liability insurance: (1) Those that implement key management of pollutant discharge permits in accordance with the law; (2) Those that are included in the list of key pollutant discharge units in Shenzhen; (3) The environmental risks identified in the corporate emergency plan for environmental emergencies (4) Other circumstances under which compulsory liability insurance for environmental pollution should be insured as prescribed by laws and regulations. Before purchasing the insurance, the unit shall perform the obligation of notification and explanation, and shall renew the insurance in time before the expiration of the insurance contract. For units that refuse to apply for insurance or renew insurance, the municipal department in charge of ecology and environment shall order corrections, and those who refuse to make corrections shall be punished according to law.

In addition to fulfilling the obligation of compensation, insurance companies shall withdraw no less than 25% of the total premiums from the compulsory environmental pollution liability insurance premiums each year, and use them exclusively for environmental risk prevention and control services (environmental risk prevention and control services include but are not limited to risk warning, Risk assessment, hidden danger investigation, education and training, etc.). The insurance company's compulsory environmental pollution liability insurance business shall be supervised and inspected by the China Banking and Insurance Regulatory Commission.

The measures also require the Shenzhen Municipal Bureau of Ecology and Environment, together with the Shenzhen Banking and Insurance Regulatory Bureau, to establish a platform for information sharing and management of compulsory environmental pollution liability insurance, which can be used by insured entities and insurance companies to submit insurance application, underwriting, risk management and claims information.

With the introduction of the "dual carbon" goal, compulsory liability insurance for environmental pollution will inevitably become a trend. On the one hand, this type of insurance provides risk protection for enterprises and diversifies business risks. On the other hand, it is also for risk prevention in advance. The bearer will help enterprises identify environmental risks, investigate environmental hidden dangers, and urge enterprises to make timely rectification, so as to achieve the purpose of reducing pollution and carbon.