China Ministry of Environmental Protection and the China Insurance Regulatory Commission (CIRC) have jointly issued a framework for hazardous and heavy industries to cover their operations under substantial insurance policy.
Designed to save the environment from heavy industries and other enterprises posing high risks, the new compulsory insurance will currently cover more than 2,000 companies at the cost of RMB20bn ($3.2bn).
In the event of violation of the environmental safety guidelines and spreading pollution, the responsible companies will have to provide compensation for damage caused by polluting accidents.
Some industries, which cause more pollution including mining, and smelting industries, as well as lead storage battery manufacturers, leather goods companies and chemical factories, have been brought under the ambit of new insurance guidelines.
As per the new guidelines, special environmental protection funds will be allocated in favour of participating firms, which will also enjoy priority in bank lending.