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The roles of insurance and well‐specified standards in dealing with environmental risks
Author(s) -
Freeman Paul K.,
Kunreuther Howard
Publication year - 1996
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/(sici)1099-1468(199609)17:5<517::aid-mde793>3.0.co;2-y
Subject(s) - liability , business , compensation (psychology) , context (archaeology) , database transaction , liability insurance , actuarial science , risk management , risk analysis (engineering) , finance , computer science , psychology , paleontology , psychoanalysis , biology , programming language
The present liability system for managing environmental risks has had huge transaction costs through the courts with limited funds actually utilized for compensation (except to the lawyers) and cleanup of wastes. This paper discusses the use of insurance coupled with well‐specified standards as an alternative to the current system. It illustrates the potential for the use of these policy tools in the context of two environmental risk management problems: providing liability protection to contractors involved in asbestos removal and protecting commercial property lenders and owners from liabilities associated with environmental contamination.