New European environmental regulations may create need to review liability insurance

European organizations that had not previously thought of themselves as being at high risk of causing environmental damage may need to reconsider whether to buy specialist environmental impairment insurance as a result of new regulations.
The Environmental Damage (Prevention and Remediation) Regulations 2009, which came into force in England on Mar. 1, 2009 implements the EU’s Environmental Liability Directive.
Lloyd’s of London notes the new regulations require almost any organization involved in economic activity — including charities and public sector entities — to prevent environmental damage to water, land or biodiversity-protected habitats or species and “sites of special scientific interest.”
“There’s no doubt the directive may give rise to greater environmental liabilities for companies in future,” Lloyd’s quotes Aidan Thomson, partner at law firm Barlow, Lyde and Gilbert. “It’s a more comprehensive regime that should be easier for regulators to use.”
The rules impose a new obligation on organizations to prevent environmental damage and to notify the authorities if damage is about to occur or has already happened.
Organizations must not only put right the pollution they cause, but will also have to rehabilitate a site back to its original condition.
If that is impossible, or if it may take a long time to complete, an organization can be obliged to compensate for blighting the area.
These “complementary” and “compensatory” remediation requirements create new liabilities for organizations, particularly those operating near environmentally sensitive areas such as nature reserves, says Alan Grayston, senior underwriter in environmental impairment liability at Liberty International Underwriters.
Companies may need to look overseas, to North America, or EU member states that have already incorporated the directive, for a way to assess their liabilities, says Cliff Warman, the EMEA environmental practice leader at Marsh.