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

Author

Listed:
  • Thomas Barbiero

    (Department of Economics, Toronto Metropolitan University, Toronto, Canada)

  • Daniele Bertolini

    (Law and Business, Toronto Metropolitan University, Toronto, Canada)

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.

Suggested Citation

  • Thomas Barbiero & Daniele Bertolini, 2025. "Legal and Economic Determinants of Underpurchased Pollution Coverage: Lessons from Italy," Working Papers 095, Toronto Metropolitan University, Department of Economics.
    • Handle: RePEc:rye:wpaper:wp095
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    JEL classification:

    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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