Colombia does not have a clear environmental regulation that sets the parameters under which the insurance policies that cover environmental damages must pay compensation or on how to determine the risks derived from them. Therefore, there is no clear delimitation between a liability regime for environmental damage and another derived from natural events.
The above since Law 491 of 1999 created the Ecological Insurance as an instrument that seeks to cover the quantifiable economic damages in favour of certain persons as a result of damage to the environment and natural resources. However, this law has had confuse interpretations insofar as, in some cases, they seek to understand ecological insurance as a casualty third party liability insurance, and in others, as a property insurance that covers the damage to the environment.
Faced with this legal uncertainty, the Ministry of Environment specified -by means of concept 010931 of April 17, 2018-, the scope of Law 491, highlighting the following:
1. To the extent that the ecological insurance created in Law 491 of 1999 has not been regulated, it is not mandatory but it is a requirement for obtaining the environmental license and its purpose is to cover quantifiable economic damages to specific persons. In this sense, the Ecological Insurance is not an environmental insurance.
2. Ecological insurance is a third party liability insurance that covers damages caused to property owned by third parties as a result of a pollution or deterioration problem or environmental damage.
Accordingly, this insurance product is contained in policies regulated by civil and commercial regulations that seeks to protect the estate of the policyholder/insured in the policy. This insurance depends on the international reinsurance market, and as there is no insurer in Colombia that is able to support unlimited liability coverage for pollution, which is a catastrophic risk, or able to bring coverage against environmental damage or deterioration of nature in the abstract, the coverage of environmental risks will always be a decision-making process for its acceptance or rejection by the insurer.
Finally, the purpose of this insurance can not be confused with the preservation of the environment.