Legal and Economic Determinants of Underpurchased Pollution Coverage: Lessons from Italy

Thomas Barbiero () and Daniele Bertolini ()
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Thomas Barbiero: Department of Economics, Toronto Metropolitan University, Toronto, Canada
Daniele Bertolini: Law and Business, Toronto Metropolitan University, Toronto, Canada

No 95, Working Papers from Toronto Metropolitan University, Department of Economics

Abstract: This paper investigates the determinants of environmental liability insurance (ELI) market penetration in Italy. The uptake of (ELI) in Italy shows significant regional disparities, with the North and Centre having a higher level of coverage compared to the South. Only 0.45% of Italian companies had comprehensive (ELI) in 2021, and 0.64% in 2022, the year for which the most recent data are available. We show that the low uptake of ELI and the large North-South divide, lies in the uneven regulatory landscape and enforcement intensity across regions. To bridge this gap and enhance ELI adoption, comprehensive policy interventions are necessary, including uniform national enforcement of environmental regulations, expansion of mandatory insurance requirements, financial and market-based incentives for firms, educational programs to address awareness and behavioral biases, and initiatives to reduce information asymmetries. Our results for Italy, may be applicable to other countries with similar national environmental laws, market maturity of the insurance sector, and the behavioral profile of firms.

Keywords: Insurance Law and Economics; Insurance Demand; Under Purchased Insurance; Regulatory Pressure; Environmental Liability Insurance; Environmental Liability Directive; Behavioral Anomalies; Pollution Coverage Equilibrium (search for similar items in EconPapers)
JEL-codes: G22 K22 K32 Q5 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2025-07
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