Professional Documents
Culture Documents
I nsur e r s of Eu rope
April 2009
About the CEA
The CEA is the European insurance and reinsurance federation. Through its
33 member bodies, the national insurance associations, the CEA represents all
types of insurance and reinsurance undertakings, eg pan-European companies,
monoliners, mutuals and SMEs. The CEA, which is based in Brussels, represents
undertakings that account for approximately 94% of total European premium
income. Insurance makes a major contribution to Europe’s economic growth
and development. European insurers generate premium income of €1 122bn,
employ one million people and invest more than €7 200bn in the economy.
Environmental liability
Contents
1. Executive summary 5
2. Introduction 7
5.3 Summary 30
6.1 Introduction 31
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7. Adopting efficient claims management criteria 42
7.7 Monitoring 49
9. Closing remarks 52
10. Annexes 55
10.6 Glossary 67
1. Executive summary
This is the third report the CEA has published in the last three years on the EU’s
Environmental Liability Directive (ELD) and the impact of its transposition into EU
member state law.
Transposition of the ELD has continued beyond the 30 April 2007 deadline. A few
EU member states are still in the transposition phase or are drafting legislation.
However, most member states have enacted the ELD, with some following the
scope of the ELD very closely and some exceeding it.
In EU member states that enacted law very close to the scope of the ELD, there
is a trend for insurance products to start to emerge. This is a strong indication
that a clear legal framework and a close relationship to the ELD are key to the
development of sustainable insurance solutions.
Risk selection and a sound risk assessment process are important steps in the
appropriate assessment of a risk. Close cooperation between the operator who
wishes to insure his liabilities under the ELD and the insurer is essential if the
insurer is to assess the risk adequately.
The ELD requires new claims management skills, in particular when it comes to
compensatory damage. Good underwriting is not sufficient if insurers cannot
handle claims properly or if insurers are not involved in the claims decision process.
As the competent authority is the body responsible for either accepting the
preventive or remedial actions proposed by the operator or determining its own
preventive or remedial measures, the insurance industry has a significant interest
in being part of that process and developing an effective working relationship
with the relevant authority, particularly for cross-border damage.
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The CEA aims to extend its close cooperation with the European Commission’s
Directorate-General for the Environment and to support the national transposition
authorities, through the national insurance associations, by:
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2. Introduction
This report aims to provide a deeper analysis of the findings and conclusions in
the CEA’s report of February 2008 (“Enhancing Sustainable Insurance Solutions’’
and addresses the most recent developments in the following areas:
As legal clarity and certainty are key prerequisites of insurability, the section
below highlights the key issues of the ELD which have a significant impact on
the underwriting process.
Both of the liability regimes apply to the “imminent threat of damage occurring
by reason of the relevant activities”. Imminent threat of damage means “a
sufficient likelihood that environmental damage will occur in the future”.
The ELD is not retrospective, so any damage caused before 30 April 2007 (the
deadline for implementation of the ELD) is not covered by its provisions.
Public authorities play an important role under the ELD. Enforcement is their
responsibility, including the identification of potentially liable operators, the
instigation of preventive and/or remedial measures, and, where applicable, the
financing of such measures.
Public interest groups, such as NGOs, will be able to require public authorities
to act and, if necessary, to challenge their decisions in the courts. Additionally,
the Directive on public access to environmental information (2003/4/EC), which
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became binding on 14 February 2005, gives the European public better access to
environmental information, thus enhancing their ability to demand action.
Under the permit defence, the operator may not be liable where he demonstrates
that he was not at fault or negligent and that the environmental damage was
caused by an emission or event expressly authorised by, and fully in accordance
with the conditions of, an authorisation conferred by or given under applicable
national laws and regulations.
(a) was caused by a third party and occurred despite the fact that appropriate
safety measures were in place or
Under the state of the art defence, there may be an exemption from liability
where the operator can demonstrate that the activity was not considered likely
to cause environmental damage according to the state of scientific and technical
knowledge at the time.
• Primary remediation: any remedial measure that returns the damaged natural
resources and/or impaired services to, or towards, baseline condition.
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The manner in which the ELD has been transposed means that there is no
harmonised liability system. This means that there is a strong possibility that there
will be variations in enforcement. These issues pose quite significant challenges
for the insurance industry for both underwriting and claims. At European level
there is now an absence of one of the most important prerequisites for insurability,
ie legal clarity and certainty.
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• Hungary did not transpose the term “operator” as used in the ELD. The
“user of the environment” is liable for any environmental damage. The
“user of the environment” is any user who may cause environmental
damage. This includes the operator, the owner of the land and the people
in charge of business decisions (eg directors, officers).
• Poland has extended the scope of land damage by including changes
to soil quality standards which do not create a significant risk to human
health.
• In the Czech Republic an additional decree on the protection of some
national protected species is expected, and the same is true in France
where an additional list of protected habitat and species will be drawn up
by the Ministry of the Environment.
• Romania has limited the application of the state of the art defence to
cases where the operator demonstrates that it was not possible to cause
environmental damage, instead of was not considered likely.
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• Hungary has not transposed the permit defence, except for cases where
the damage is the direct consequence of an administrative court decision
containing an obligation (different to permits or licences).
• Some member states will apply the transposition legislation only for
emissions, events or incidents that took place after enacting of the law (no
retrospective application). This might be seen as a violation of the ELD.
• Hungary will require financial security for IPPC3 and landfill activities.
• Greece will implement something from May 2010 but has yet to decide
what it will require.
• Spain will require the minimum amount of the financial guarantee to
be determined by the competent authority according to the risk level
(between €300 000 and €20m).
• Slovenia has a requirement for bank guarantees or other forms of payment
security after environmental damage has occurred.
• Others, such as the Czech Republic, are looking for the requirements to
become effective at different dates over the next 3 years.
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The aim of this section is to help underwriters to identify the potential overlaps,
gaps or inconsistencies of coverage within the scope of the most common
products in the various European markets, to enable informed decisions to be
made. All insurance solutions that potentially provide coverage for claims from the
competent authority and arising from environmental damage are considered.
The operator’s rights of recovery against the manufacturer or installer may well
be subject to different legal systems, eg civil liability or principles. This could result
in the operator not being able to recover fully the loss for which he is liable.
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in civil law for the recovery of losses incurred as a result of the environmental
damage.
Some legislation might allow claims directed against the manufacturer or importer
of certain products to remediate environmental damage (eg damage caused by
genetically modified organisms (GMOs)).
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Wrongful decisions may result in claims by the operator against the authority
for financial losses incurred as a consequence. Wrongful decisions may also lead
to claims for damage to a third party’s property, resulting in civil liability claims
against the operator who then subrogates to the authority.
Both are claims to recover compensation paid by the operator arising from the
negligent act of the authority.
It is unlikely that the transposition of the ELD will result in an increase in claims
frequency, ie accidents with dangerous goods have always happened, but higher
claims payments can be expected in this respect, due to the greater emphasis on
restoration in the ELD.
Policyholders most at risk are enterprises and freight forwarders dealing with the
transportation of dangerous goods or waste, as specified in Annex III. Insurers
may wish to study the impact of the ELD on MTPL insurance to decide to what
extent it may affect the coverage provided and to inform insureds accordingly of
the decision.
4 This is limited to cases which do not fall under the “UNECE Convention on civil liability for damage
caused during carriage of dangerous goods by road, rail and inland navigation vessels”.
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In any case, coverage designed for this purpose should be in line with GTPL and
environmental impairment liability (EIL) solutions, in order to avoid other gaps/
overlaps. Special attention should be paid to activities that may be borderline
in terms of which policy is the most appropriate, such as loading/unloading
operations. Similar attention should be paid to professional or commercial
activities performed using non-industrial vehicles and even private ones.
The analysis of motor accidents shows a large number of cases where measures
to prevent imminent environmental damage have been necessary (eg by the fire
brigade) due to the release of gasoline and other harmful liquids. Some of these
measures were also necessary to prevent further third party injury or damage to
property.
The scope of remediation covered is usually broader than the ELD requires,
ie restoring the original condition as opposed to the necessary measures to
eliminate any danger to human health. Even so, in order to avoid potential gaps
— and overlaps, eg GTPL or EIL — the classes of events in which consequential
soil pollution is covered should be clearly determined and compared against all
potential risks that could result in soil pollution.
It should also be understood that own soil pollution can be caused by a third
party. In order to evaluate the risks, possibilities of recovering costs and potential
coverage for these claims, the third party analysis should include surrounding
activities, as well as subcontractors, tenants and clients, eg a service company
works on an oil tank and causes pollution to the soil. Fire authorities can also
create soil pollution as a result of the run-off of water used to extinguish a fire.
Prior to binding the insurance cover, the risk assessment should include a close
examination of these and other risks when the clean-up of first party premises
and property is included in the cover.
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However:
• This approach could still result in the duplication of claims in cases where a
concurrence of environmental liability with traditional third party pollution
liability covers exists in the event of a loss. This would be the case if the
same pollution event triggers third party property damage and bodily
injuries as well as environmental damage.
• Insurers have to take into consideration their accumulation potential —
see section 5.2.9 — in order to put in place the proper controls or establish
the proper loss accumulation limitation clauses as appropriate.
• Increased administrative expenditure can be incurred by the insurer having
to issue and manage specific policies on a separate basis.
• whether they cover only claims based on public law (eg ELD) or also third
party pollution/environmental impairment based on civil liability
• whether they cover only liability claims arising from pollution events or
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In any case, endorsements should deal clearly with the features of the ELD,
namely:
Also, it must be made clear whether the coverage is limited only to pollution
events or whether it includes all kinds of environmental impairment/damage.
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• sudden and identifiable in time (eg fire, explosion, collapse, flood) directly
leading to environmental damage (eg land contamination), commonly
known in the insurance market as “sudden and accidental”
• sudden and identifiable in time, identical to the above but gradually
causing environmental damage (eg groundwater contamination)
• sudden but remaining unnoticed, including its consequences, over a
period of time (eg leakage of an underground storage tank), and gradually
causing environmental damage
• unintended and unexpected, remaining unnoticed, including its
consequences, over a period of time (eg seepage), and gradually causing
pollution up to the moment that it or its consequences are finally
discovered. Usually described as “gradual”, although market practice in
EU member states varies.
Events that are sudden and identifiable in time display some positive features
that reduce some of the difficulties of environmental risks:
• The precise timing of the event causing the emission is almost always
known, so the timeline of events leading up to the loss, and thus the
coverage period, can be objectively determined.
• Putting in place measures to limit, control and repair the damage is easier
and the economical consequences are likely to be lower.
• Claims reserving can be done more quickly and reliably.
• The estimation of frequency of loss events, based on existing accident data
from traditional damage, is possible for “sudden and accidental” events.
Where an accidental event causes “gradual” emissions, the conditions for claims
management can become much more complicated. In addition, if the policy
wording lacks clarity, it may be difficult to allocate the emissions to a definite
point in time. This can lead to disputes over coverage and which insurance
contract should bear the claim. As a consequence, it is possible for the damage
to become much more severe due to delays in resolving disputes.
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Underwriters designing insurance coverage may wish to consider the fact that
the ELD is not limited to the consequences of pollution or emissions of hazardous
substances. The scope of the ELD is much broader and also encompasses non-
emission related environmental effects such as the consequences of:
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The same applies to measures for the prevention of impending insured damage
to persons and property when an accident has occurred (prevention6 and/or
mitigation7 costs). In practice, it is anticipated that remedial measures will be
similar.
Underwriters may wish to extend the coverage beyond the scope of the ELD and
to cover any costs for cleaning up land contamination to the baseline condition
rather than just to limit the coverage to the cost for measures necessary to
remove any significant risk to human health. This coverage is commonly known
as first party clean-up costs cover.
Primary remediation
This instrument is already known to public authorities as a result of existing
environmental legislation. Despite this, primary remediation of species and
habitats can be very controversial and lead to much uncertainty in terms of cost
efficiency. Exhaustive remediation programmes can be extremely expensive, with
marginal environmental improvement. Therefore, in order to achieve a proper
risk assessment, premium calculation and sound underwriting, technical criteria
should be developed to decide on the methods to be implemented and the
objectives to be achieved in the case of environmental damage.
Complementary remediation
This is basically a new instrument for the remediation of environmental damage
but it is already known in respect of infrastructure projects (moving of existing
habitats). There are major issues still to be resolved and legal grey areas which
could well result in disputes with the authorities in the event of a loss, eg
regarding:
6 Expenses for measures prior to occurrence of an insured event to avert or mitigate an otherwise
unavoidable instance of insured damage.
7 Expenses for measures after the occurrence of an insured event undertaken by the insured or
those acting on their behalf in order to avert or minimise insured losses (salvage expenses or loss
mitigation expenses).
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Compensatory remediation
These measures are not connected with the cost of restoring the baseline
condition or the original environmental benefit, but with compensation of the
loss of availability of the environmental services for the period of time needed to
recover the baseline conditions. There are no guidelines for calculating the levels
of this kind of harm so far. Insurability will be enhanced through the creation of
clear and consistent guidelines that can be applied to all EU member states and
all cases of environmental damage.
As a result, the insurance industry finds a wide field of uncertainty when trying
to estimate reliably the amount of compensatory remediation due, and the
costs thereof, as a basis for premium calculation. The insurance industry awaits
the final outcome of the REMEDE project (Resource Equivalency Methods for
assessing Environmental Damage in the EU, a project funded through the Sixth
Framework Programme of the European Commission). The delivery of the tool
box hopefully will go a long way towards removing much of the uncertainty and
will bring some consistency. However, in the meantime, the uncertainty should
be considered when deciding on binding coverage for this category of restoration
by using the various tools at the underwriter’s disposal.
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after the expiry of the policy for insured losses which occurred during the policy
period but were not known, had not manifested themselves or for which claims
were not made by the expiry date (extended reporting period).
9 For example, some federal states in Austria (eg the draft legislation in Niederösterreich, Kärnten,
Wien foresees financial security partially) or the UK (Wales foresees the implementation of financial
security regarding GMOs).
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The same will apply for environmental damage in a non-EU country caused by
an operator in an EU member state (eg pollution of Lake Constance in Germany
causing damage to species and habitats protected by law in Switzerland).
The scope of liability for prevention and remedial measures will be part of the
corresponding environmental legislation in the country where the environmental
damage occurs. Whether the EU operator has to bear the costs will be part of
bilateral or multilateral agreements.
Underwriters may wish to consider using a clear definition of the covered losses,
preventive and remedial measures in the insurance policy rather than referring
to local legislation (eg definition of covered prevention, primary, complementary
and compensatory remedial measures). As part of the risk assessment and
loss estimation process, underwriters should take into account the different
environmental liability legislation in neighbouring countries.
Multinational programmes10
Operators with activities in various countries may wish to cover their liabilities
with a comprehensive multinational insurance programme usually composed of
a master policy issued in the country of the head office and local policies issued in
the countries of branches that apply difference in conditions (DIC11) or difference
in limits (DIL12) concepts. The coverage of the master policy is negotiated based
on the needs of the insured and the products offered in the country where the
policy is issued. For example, a master policy issued in Germany is based on the
local wording, which is designed to cover the liability according to Germany’s
environmental damage law. Local policies issued in other territories will reflect
the local standards and liability regimes. The DIC extension to the master policy
will extend the scope of coverage of the local policies to that of the master
policy.
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Below are some questions regarding the design of products that need to be
answered when drafting this kind of programme:
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General remarks
Non-site-specific professional activities need a special assessment for which
additional factors will be very relevant:
It is important to bear in mind that the operator of an ”Annex III” activity can
be held strictly liable for loss or damage, as well as the external contractor who
caused the environmental damage. In this case the plant operator will have the
right of recourse against the party/polluter who originally caused the accident, ie
the external contractor. In the same way that defective products may be covered
by the manufacturer’s product liability policy, this claim under civil law may well be
covered under the external contractor’s GTPL policy. During the risk assessment
process, the additional exposure of the legal risk of change should be taken into
account. When cover is extended to incorporate these new loss categories, it
is important to note that claims under recourse proceedings can be made for
damage sustained by protected species and natural habitats (fault-based liability)
as well as for water and land damage in cases where the plant operator is strictly
liable for an ”Annex III” activity.
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Coverage for completed operations
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The owner of the plant or land where the environmental damage has its origin
may be liable and have to initiate remedial measures. In this case the plant
operator or landowner will have the right to claim for compensation against the
party who caused the environmental damage (liability based on civil law). This
recourse claim will include the costs of land or water damage (strict liability for
an “Annex III” activity) which might go beyond the fault-based liability of the
contractor.
There are various occasions where a contractor might become liable, for example,
in cases of environmental damage due to:
• In some cases the contractor operating on third party land can be pursued
in civil law by the owner — who is liable for environmental damage (eg
as operator of an “Annex III” activity) — for the cost of preventing and
remediating environmental damage to the extent that the civil liability law
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• stacking of limits:
This might be the case for gradually occurring damage which might
trigger several policy periods, or the same policy period several times. An
adequate definition of an insured event and a clearly defined policy trigger
(as outlined above in section 5.2.4) are appropriate safeguards to prevent
the stacking of limits.
The limit of liability should take into account a number of factors, including
the result of a risk assessment that may identify the potential impact on the
environment. Some activities (eg “Annex III” activities) and/or locations (eg
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Deductible
An insured should be willing to take a financial interest in their own risk to avoid
any misuse of the insurance protection and to eliminate small, routine losses that
are best dealt with outside insurance mechanisms. It should not happen that an
operator avoids proper environmental behaviour because it is cheaper to buy
insurance coverage than to invest in necessary maintenance measures or safety
installations. The levels of deductibles and market practice vary from market to
market.
14 EU Directive 96/82/EC
15 The EU Eco-Management and Audit Scheme (EMAS) is a management tool for companies and
other organisations to evaluate, report and improve their environmental performance.
16 ISO 14001 specifies the actual requirements for an environmental management system. It applies
to those environmental aspects over which the organisation has control and over which it can be
expected to have an influence.
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Underwriters may wish to consider aligning the duty of the insured in the case
of an insured event with the obligations according to transposition law. Some
of the requirements under transposition laws may be in conflict with obligations
imposed on an insured through conditions (that may be precedent to liability)
contained within a policy wording. This may hinder the handling of any claims
(see also section 7 on claims handling). A possible consequence may be that
the event/claim is not insured. An early notification to the insurer is therefore
necessary to initiate timely and relevant steps in claims handling, enabling the
insurer to have control over a claim.
To avoid the risk of an insured being in breach of policy conditions that may
prejudice the protection he has for environmental damage, underwriters may
wish to consider adapting the claims notification requirement within a policy to
meet the needs of both the insured and insurer. This may need to vary in different
EU member states to match the provisions of the different transposition laws.
5.3 Summary
Underwriters may wish to first consider which product is the most appropriate
to cover liability for environmental damage, then assess different options (eg
extensions of GTPL or EIL covers taking into consideration the geographical
scope of the insured’s activities). Finally, underwriters should identify the possible
impact on other products such as potential overlaps, gaps or inconsistencies of
coverage within existing insurance policies (eg GTPL, EIL, MTPL).
In EU member states in which transposition has followed the scope of the ELD very
closely, insurance solutions have entered the market. There is a strong indication
that a clear legal framework and an in-depth understanding of the scope of the
liability is key to the development of sustainable insurance solutions.
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6.1 Introduction
The assessment of environmental risk requires a relatively complex evaluation
and investigation process so that appropriate decisions are made, particularly
with regard to risk assessment and management. The purpose of this section is
to assist insurers with the evaluation of the risk of damage and to provide a broad
overview of existing risk assessment concepts and methodologies applicable to
the evaluation of risk of environmental damage17.
The preliminary stage of the risk assessment may focus on the development of an
initial conceptual model of the occupational activity and establish whether there
may be potentially unacceptable risks. During this stage the assessor collects
and reviews all available desk-based information and may also carry out field
assessments to assist with the preparation of a conceptual model. The main
stages of the risk assessment may be to:
The risk assessment is an iterative process that may require further investigation
and assessment to revise and update the conceptual model and/or to focus the
assessment as appropriate.
17 Recital 7 of the ELD promotes the use of risk assessment procedures for the purposes of assessing
damage to land. While the concepts and methodologies outlined in this report may also apply to
some degree to such a risk assessment approach, this section is not intended to deal specifically
with the assessment of land damage.
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The model is initially derived from information obtained during the preliminary
desk-based investigation and is used to focus any subsequent investigation(s)
considered necessary. The results of additional field investigation can provide
data to further refine the conceptual model. Therefore the conceptual model
is a working model to be refined and validated throughout all stages of the
investigation process. The elements of the conceptual model as they pertain to
environmental liability laws are outlined below.
The regime does not apply to cases of personal injury, damage to private property
or economic loss. Further, EU member states have the option of imposing liability
for environmental damage to species or natural habitats that have similar
provisions for nature conservation under national law.
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Transposition laws are not the only laws that require measures to be taken to
offset the loss of protected natural habitats and species if damage is likely to be
caused to such natural resources. Such measures are also included in laws which
have transposed the Birds Directive, the Habitats Directive and the Environmental
Impact Assessment Directive20.
Some other benefits gained from the development of the conceptual model may
be to:
• evaluate the liability status of the activities, ie whether they may be subject
to a strict or fault-based liability regime under environmental liability
laws22
• document the ownership and operation history of the activity
• evaluate details of any pre-existing site conditions and associated
environmental liabilities.
The investigation may include technical and environmental, and legal and
corporate elements.
20 Council Directive 79/409/EEC of 2 April 1979 on the conservation of wild birds, (OJ L 103 of
25.04.1979, p1-18)
Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild
fauna and flora, (OJ L 206, 22.7.1992, p7–50)
Council Directive 85/337/EEC of 27 June 1985 on the assessment of the effects of certain public
and private projects on the environment, (OJ L 175, 5.7.1985, p40) as amended by Directive
97/11/EC of 3 March 1997 (OJ L 73, 14.3.97, p5)
21 Busenhart, J., Baumann, P., Schauer, C., Orth, M., & Wilke, B. (2007) “Insuring environmental
damage in the European Union”, Technical Publishing Casualty, Swiss Reinsurance Company,
Swiss Re publications, Order No.1503205_07 (email: publications@swissre.com)
22 It is proposed by Swiss Re that the differentiation between strict liability and fault-based liability
facilitates an initial separation of risks. The main differentiating factor is that non-“Annex III”
activities have a lower risk potential. Busenhart, et al., 2007, Section 5, p36
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human receptors
nearby residences and recreational facilities
nearby industrial, commercial and retail areas
schools, hospitals, institutions and other places of public assembly
ecological/environmental receptors
protected sites and habitats
protected species
water catchment areas and supplies for human consumption
coastal or freshwater habitats
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������������������������������������������������������������������������������������������������������
William S. Klingmuller “Risk Assessment for Deliberate Releases: the Possible Impact of Genetically
Engineered Micro-organisms on the Environment”, Springer-Verlag GmbH & Co. ISBN 3 540
189300 (1988)
Anne Ingeborg Myhr and Terje Traavik “The precautionary principle applied to deliberate release of
genetically modified organisms (GMOs)”, Microbial Ecology in Health and Disease, 1999, 11:65-74
Lindhurst, R.A., Bourdeau, P. and Tardiff, R.G. (eds) “Methods to assess the effects of chemicals
on ecosystems”, p436, Chichester: Wiley (1995)
UK DEFRA and UK Environment Agency “Guidelines for Environmental Risk Assessment and
Management”, 2 August 2000, last modified 19 September 2002, http://www.defra.gov.uk/
environment/risk/eramguide/
UK DETR “Guidance for Environmental Risk Assessment and Management”
Ferguson et al., “Risk Assessment for contaminated sites in Europe” Vol .1, Scientific Basis, 1998,
LQM Press, Nottingham
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The risk assessment guide should be useful not only for insurers, but also for
other stakeholders such as risk managers and environmental regulators.
The effort devoted to the ERA should not need to be duplicated by each interested
party. Therefore, the ERA report should compile all relevant risk aspects and be
produced and drafted in a way that can be acceptable to all.
It is therefore recommended that the ERA be embodied in a report that fulfils the
following requirements:
Recommended content:
• objectives and scope
• methodology used, which is sufficiently recognised, according to national
or international standards24
• description of the assessed activity, including main and complementary
activities and relevant licences, permits or other regulatory orders.
Where the activity is subject to an administrative permit or licence, this
description should be the same as, or make reference to, the description
of the authorised activity
• identification and description of the possible initiating events
• identification, description and prioritisation of the accident scenarios and
perils
• identification and description of the natural resources that would potentially
be damaged in the case of an occurrence of the identified scenario(s)
• measurement of the status of baseline condition of the natural resources
exposed to the risk, with special attention to the known or suspected
historical pollution
• identification of the environmental conditions that may modify the
consequences of the occurrence
24 For example the Spanish UNE 150008:2008 Environmental Risk Analysis and Assessment; ISO
14015:2001 Environmental Assessment of Sites and Organisations (EASO)
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http://mahbsrv.jrc.it/Activities-WhatIsMars.html
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http://ec.europa.eu/environment/water/flood_risk/flood_atlas/index.htm
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flood mapping in Europe, including an atlas of examples from all over Europe.
The address of the street or the geographic coordinates are sufficient inputs for
all three modules of ZÜRS Geo. The three modules are:
• Basic Module: this serves for use of geo-data across insurance lines,
including use of GIS functionalities without requiring a GIS for the
insurance industry
• Flooding Module: this assesses the risk of flooding and is particularly
relevant to the property sector
• Third Party Liability (TPL) Module: this assesses the environmental risk
related to a location in relation to, for example, protected species and
protected areas
The TPL Module allows both a standard and an expert level of interrogation. The
expert interrogation is intended for individual analysis of a single insured location.
It is possible to select the required data layers and specific issues relevant for the
selection. For each inquiry, the following possibilities exist:
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In 2000, the French insurance market created MRN28 after huge losses resulted
from storms (eg Lothar and Martin), large floods and subsidence (see Annex
10.5).
It is the user’s responsibility to ensure that the data are fit for any intended use
and to comply with all relevant terms and conditions associated with their use.
Users should be familiar with the terms and conditions of usage of each database
resource and understand the limitations associated with the data, for example:
• relevant copyright, licensing and fee requirements associated with the use
of the databases and any maps, reports and information generated from
them
• the grid area covered and level of accuracy of the maps and data. There may
be errors due to differing map scales used to calculate the grid references,
as many maps may have been developed before the widespread use of
GPS
• the status of the database/map development (eg whether it comprises a
complete dataset)
• how frequently the dataset is updated and when it was last updated to
take into account updates in legislation or alterations to site boundaries,
etc.
• for biological data, whether data was collected at a time of day and year
28 MRN (Mission Risques Naturels): an association between the FFSA (Fédération Française des
Sociétés d’Assurances) and GEMA (Groupement des Entreprises Mutuelles d’Assurances)
29 Editors of the MRN database include: Institut Géographique National (IGN), Ministère de
l’Environnement et du Développement Durable (MEEDDAT), local authorities and flood plain
management authorities, Institut Français de l’Environnement (IFEN), Le Réseau National des
Données sur l’Eau (RNDE), Infoterre (BRGM), Spot Image.
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• EIL
There will be a greater need to understand the sensitivity of the site
environs in terms of the types of species and the uniqueness of the
habitats present but this represents an extension of existing practice
as opposed to something completely new. Other criteria such as the
applicant’s risk management and the ability of ground and groundwater
conditions beneath the site to act as pathways for pollution are already
assessed as part of the underwriting approach.
• PL
As discussed above, PL underwriting is based at least partly on loss
experience to establish the MPL as well as the insured’s risk management
practices. Compensatory and complementary remediation creates issues
for the PL market in that the loss experience to understand the MPL
is not readily available. The PL market is looking to use geographical
information systems and hazard/industry risk assessments as a means to
assist with determining pricing, terms and conditions30, but this approach
has yet to be widely formalised. As the PL market also covers loss outside
of pollution, this brings an extra dimension to the assessment process
that has to be understood.
Both lines of insurance provide cover for costs incurred in the defence or evaluation
of loss. While this may not influence how to decide on a risk directly it is likely to have
a bearing on the terms that an underwriter will apply to a risk. As losses associated
with the more subjective elements of the ELD (compensatory remediation) are less
well understood it follows that determination of that loss may take longer and have
greater expense associated with it. This will be an issue that underwriters will have to
consider as part of their overall view of a risk when setting terms and conditions.
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Insurance is a promise to pay claims in the event that the policyholder suffers
an insured loss. It is at this moment of misfortune that the insured really needs
professional, competent and efficient claims services.
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• The potentially liable party has to submit potential remedial measures to the
competent authority, which will ultimately decide on the implementation
of measures with its cooperation.
• The damage assessment, the remediation project and its execution require
specialist adjusters and contractors who may not be prepared as this is a
new area.
• The remedial measures implemented will have to be monitored throughout
the remediation period, in order to allow:
Claims handlers may therefore wish to consider the points set out below.
However, insurers may have a significant interest and will wish to be involved
in this decision-making process. If they are expected to pay the costs of the
preventive and remedial actions, insurers will wish to exercise a degree of control
over the claims.
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taking into consideration not only the natural resources but also the functions
they perform for the benefit of another natural resource or the public (ie natural
resource services).
In the case of environmental damage that has already occurred, the liable
operator/insured will have to supply the competent authorities with sufficient
information to determine whether or not there is environmental damage
under the transposition law. The ELD itself does not include any definition of
“significant”, but explanation may have been introduced in the applicable law(s).
The information will concern the following:
In both cases and in parallel, the insured should be obliged to notify the loss to
its insurer promptly. This should promote a close working relationship between
the insured, the insurer and/or the experts, and the competent authorities from
the start.
For these purposes, insurers may well have to recruit specialists in this area, eg
environmental experts and/or loss adjusters.
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• chemical release
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• physical impact
• fire
• the pathways of the damaging agents (including the air), as well as the
potential or actual receptors (eg land, water, protected species and natural
habitats) with special attention to those natural resources more likely to be
damaged and to weaken the ecosystem
• the level or quantity of environmental services (eg ecological, human)
provided by the actually or potentially affected resources
For each resource and service affected, a comparison should be drawn between
“baseline condition” and “damaged condition”.
• the extent of the damage takes into account the affected resources (ie
land, water, protected species or natural habitats) and/or services, and
covers the characteristics of the damaging agent and the receptor(s)
• the severity of the damage should be estimated through the level of
resources and/or services affected, particularly in relation to:
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• the ability of the affected resources and services provided to recover within
a given period, whether naturally or otherwise
The baseline condition is determined using pre-event data from the damaged
site if available or using data from similar unaffected sites.
Specific attention should be paid in the following instances, where the use of
dynamic criteria would be preferable:
If the competent authority decides that remedial measures should be taken, the
following steps should be envisaged. The insurer should be involved in each of
them.
• natural recovery
• accelerated recovery to baseline condition by various actions:
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The remediation plan should contain an estimation of the loss of natural resources or
environmental services for the time until primary remediation is achieved (ie interim
loss). Compensatory and complementary remediation will then be initiated.
7.7 Monitoring
Monitoring reports are needed to demonstrate that remedial measures are
effective. Insurers would wish to be able to exercise a degree of control over
each step of the monitoring process.
It should include:
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Person(s) responsible for completing the remediation project report and recipients
of the report need to be decided.
• the estimation of the nature, extent, rate and efficiency of the remedial
measures (ie benefits expected and remediation goals actually achieved)
• appropriate responses in the case of unexpected negative developments
• modifications to the plan and corrective actions, if required
It is important for all parties, including the insurer, that the competent authority
gives the liable party its approval of the final remediation report together with a
certificate of completion.
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The table below sets out the advantages of a transparent and uniform exchange
of information.
Stakeholder Advantages
Responsible A quick release of information on accidents would be useful in
operator demonstrating operators’ transparency and help them to gain the
confidence of other stakeholders.
Other concerned parties gain a better knowledge and understanding from
a long-running exchange of information. For instance, knowing the types
of accidents and their possible further developments could help insurers
to better evaluate the risks and could hence lead to more favourable
insurance conditions.
Insurer Settingup a database of environmental damage in EU member states
would enable a quick exchange of statistical information, subsequently
improving underwriting and claim management skills.
Competent The competent authority has a duty to collect specified information on
authority environmental damage and to report it to the EC. A standard collection of
information would facilitate this task and ensure consistency of data.
Moreover, access to wider information would allow the competent
authority to pursue a more effective environmental policy.
Local community This would provide access to information previously unavailable to them.
Businesses Knowing about accidents involving environmental damage enables
businesses/operators to better evaluate both their own risks and risk
management opportunities (eg financial guarantee, insurance transfer).
European This would create a coherent and uniform database, essential for both
Commission a global and detailed view of the effects of the ELD in all EU member
states.
Annex 10.4 provides a questionnaire that insurers may wish to consider when
assessing the nature or extent of adverse changes and determining the appropriate
steps to be taken.
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9. Closing remarks
The development of sustainable insurance solutions will be improved if there
is legal clarity and certainty in respect of the underlying legal framework. This
relates in particular to insurance solutions provided in an EU member state that
has enacted law closely following the scope of the ELD.
Underwriters and claims handlers may wish to consider the points raised in this
report to improve their underwriting skills in developing appropriate insurance
solutions that respond to the needs of their clients and to their own risk appetite
for exposure to environmental liability, and in so doing to expand their claims
management skills to include the challenges posed by the various transposition
laws.
The CEA aims to extend its close cooperation with the European Commission’s
Directorate-General for the Environment and to support the national transposition
authorities, through the national insurance associations, by:
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10. Annexes
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Cyprus Law 189(I) of 2007. The environmental No Yes Yes Yes Yes Fault-based liability
liability with regard to prevention and
remedying of environmental damage law,
31 December 2007
Czech Act on prevention and remedying Yes Yes Yes Yes Strict liability for
Republic environmental damage, 22 April 2008 all occupational
activities
Denmark Act on the investigation, prevention and No Yes Yes Yes Yes Fault-based liability
remedying of environmental damage,
1 July 2008
Estonia Act on Environmental Liability, No Yes Yes Yes Yes Fault-based liability
28 November 2008
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Liability also Proportional or Exceptions of Liability for Retroactive Kinds of Determination of Liability for
for damages joint and several liability other historical liability remedial remedial measures environmental damages
caused by liability than ELD pollution before measures in national law beyond the scope of
defective transposition additional the directive
products date to ELD
Yes Proportional liability None No No None Yes, the law does not
distinguish between
Annex III activities
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Criteria Date of transposition and name of If not (Expected) Kind of ELD damage regulated Kind of liability
national law transposed differences for protected
yet, date of between species and
expected regions natural habitats
transposition for non-Annex III
activities**
EU soil surface ground habitat
member water water &
state species
France* Incomplete implementation, only the law, Decree No Yes Yes Yes Yes Fault-based liability
not the decree. Law no.2008-757 of 1 expected end (“en cas de faute
August 2008 ‘’relative à la responsibilité of June 2009 ou de négligence de
environnementale et à diverses dispositions l’exploitant’’)
d’adaptation au droit communautaire dans
la domaine de l’environnement”
Germany 14 November 2007: “Gesetz zur So far no, Yes Yes Yes Yes Fault-based liability
Umsetzung der Richtlinie des Europäischen but possibility
Parlaments und des Rates über die for the 16
Umwelthaftung zur Vermeidung und Bundesländer
Sanierung von Umweltschäden” of 10 to modify
May 2007 (BGBl 2006, I, page 666) the existing
federal rules
individually
at regional
level (through
implementing
provisions)
Greece* A Draft Presidential Degree was released Tranposition No Yes Yes Yes Yes Strict liability for all
on 14 September 2008 procedure is activities
expected to be
concluded by
June 2009
Hungary Act in force since 30 April 2007 Yes Yes Yes Yes
Italy 3 April 2006, Leg. Decree no.152/2006 Yes Yes Yes Yes Fault-based liability
Malta 11 April 2008, L.N. 121/126 of No Yes Yes Yes Yes Fault-based liability
2008, Prevention and Remedying of
Environmental Damage
Regulations 2008
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Liability also Proportional or Exceptions of Liability for Retroactive Kinds of Determination of Liability for
for damages joint and several liability other historical liability remedial remedial measures environmental damages
caused by liability than ELD pollution before measures in national law beyond the scope of
defective transposition additional the directive
products date to ELD
Yes Joint and several None No So far, None No Yes, protected species
liability no (Draft and habitats include
Presidential also the ones protected
Degree) and defined by relevant
national laws
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Criteria Date of transposition and name of If not (Expected) Kind of ELD damage regulated Kind of liability
national law transposed differences for protected
yet, date of between species and
expected regions natural habitats
transposition for non-Annex III
activities**
EU soil surface ground habitat
member water water &
state species
Netherlands 24 April 2008, Act amending the Yes Yes Yes Strict liability
Environmental Management Act extended to other
(Environmental liability) activities as set
out in a general
administrative
order. For all other
activities fault-based
liability
Poland 30 April 2007, Act on the prevention and No Yes Yes Yes Fault-based liability
remedying of environmental damage
Portugal 29 July 2008, Decreto - Lei No 147/2008 No Yes Yes Fault-based liability
Ministerio do ambiente, do ordenamento
do territorio e do desenvolvimento
regional
Romania Emergency Ordonance No.68/2007 as No Yes Yes Yes Yes Fault-based liability
approved by law No.19/2008
Slovakia Act 359 of 21 June 2007 on the No Yes Yes Yes Yes Strict liability for
prevention and remedying of named activities
environmental damage and amendments
to some acts
Slovenia* Environmental Act adopted as of 26 July Yes Yes Yes Yes Fault-based liability
2008 — partially implemented because
awaiting implementation decree
Spain Law 26/2007 of 23 October / Regional Yes Yes Yes Fault-based liability
Environmental Liability Act legislation not only for habitats
possible and species, but
but no big for all categories of
differences damages
expected
(mainly
procedural)
Sweden Environmental Act, entered into force Yes Yes Yes Yes
1 August 2007
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Liability also Proportional or Exceptions of Liability for Retroactive Kinds of Determination of Liability for
for damages joint and several liability other historical liability remedial remedial measures environmental damages
caused by liability than ELD pollution before measures in national law beyond the scope of
defective transposition additional the directive
products date to ELD
Yes, GMO Joint and several None No No None Yes Regulation Extended cover. All areas
products liability of the Minister of protected under national
Environment on the Polish law
criteria for evaluation
of the occurrence
of environmental
damage (published
in the Journal of
Law, 14 May 2008)
No, but recovery Proportional if share None No Yes, 30 April As per the Yes (decree Yes, (1) protected flora
actions from of contribution 2007 Directive, December 2008) and fauna species
the operator are can be estimated, except de- covered under national
explicitly ruled unless other rule is pollution of and regional law and (2)
out applicable soil, which coastline; fault-based
can require liability for all non-Annex
further III activities
actions if
baseline is
not met
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• the corporate and management structure of the operator. This may include the quality of the management of
the risk and the competence and authority of the person/people in charge. The higher the seniority the risk
management function is given within the organisation, the greater influence it will have to instigate actions
and obtain adequate funds.
• a chronology of the site/facility ownership and operation dates at least since 30 April 2007 or the effective
date of the transposition law
• history of risk assessments, understanding of the environmental risks associated with the activities and plans
for actions to minimise the risks identified
• implementation of a formal Environment Management System (EMS) as described in EMAS or ISO 14000
and commitment at all levels to implementing risk improvement measures
• regular audits to monitor performance on a continuous basis and subsequent corrective actions
• the extent to which the EMS has been externally certified or verified to recognised standards
• financial strength of the organisation. Companies need to be financially sound to implement a proper risk
management policy. Companies that are struggling financially are unlikely to invest in new equipment or to
maintain it properly. Experience has shown that in difficult times risk management can be one of the first
things to be dispensed with, as it may be seen as not adding to the profit of the organisation. The most
attractive companies for insurers will be those that are successful and will continue to invest in safe and
modern facilities and equipment.
• employee training: all employees should be given proper training in awareness of all aspects of environmental
protection. Best practice needs to be shared and implemented throughout the organisation. It is also
important for refresher training to be given so that employees can keep their knowledge up to date.
• written procedures, widely communicated in the organisation, including general policy, standards, templates,
etc.
• emergency plan that sets out in detail what to do in the event of an emergency, who has responsibility for
each action and stage and associated training of employees to respond to emergencies
• compliance with statutory requirements and regulations. If applicable dates, timeframes and details concerning
previous emissions, non-compliance events, notifications or warnings from the regulatory authority, fines or
court proceedings.
• contingency plans
• adequate testing and maintenance of plant equipment to ensure it is in good working order
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Municipality
Part 1
Responsible operator
General
Information Activity of the operator (general classification)
Affected Natural Resources
Water
Soil
Part 2
Protected Species and Natural Habitats
Damage
consequence
Third Party
description
Bodily injury
Direct and material property damage
Business interruption
Primary remediation
avoid damage
measures to
Part 3
related
Responsible party
Estimated period
Who paid
Emergency/preventive
E
measures
Remediation/clean-up (soil
beneath/below warehouse
E3
=> goal: avoid groundwater
contamination
E4
S Damage to soil
Remediation/clean-up of
contaminated soil in the
S1 neighbourhood ordered
by public authority due to
danger to human health
S2
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Primary remediation
avoid damage
measures to
remediation
Responsible party
liability
related
Estimated period
of interim losses
Measures (to be) taken (cont.)
etc.)
Who paid
W Damage to water
W1 Primary remediation
Investigation/remediation
W11
plan/ecological monitoring
Remediation/clean-up of
W12 rivers, river beds, river banks,
embankments and wetlands
Complementary
W2
remediation
W21
W22
Compensatory
W3
remediation
W31
W32
Damage to protected
P
species/habitats
P1 Primary remediation
Compensation of public
P11
authorities
Direct costs
Complementary
P2
remediation
P21
Compensatory
P3
remediation
P31
GRAND
TOTAL
TOTAL
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Source: GDV1
2nd step
Choosing the scope of the analysis (eg radius)
3rd step
Generating maps and synthetic report
Output Output
Analyse de l’environnement à proximité
Source: MRN
1 fig. Liability Module: ZÜRS Geo Online (Version 1.0.0, copyright GDV 2008); Distance classe using the example of Dessau; database: copyright
BKG (Waternetwork); copyright Landesumweltämter der Länder and Bundesamt für Naturschutz (Information about protected areas),
copyright NAVTEQ 2007 (roadnetwork)
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10.6 Glossary
Accident
A sudden, unforeseen and unintended event not under control of the insured which results in injury or damage.
Accumulation control
Measures to avoid ruinous exposure to a particular loss event by tracking all insured risks which might be subject
to accumulation and ensuring that underwriting capacity is not exceeded.
Beneficiary
The person or legal entity that the owner of an insurance policy names to receive the policy benefit if the event
insured against occurs.
BS
British Standards. Standards and information products that promote and share best practice.
CERCLA
Comprehensive Environmental Response, Compensation and Liability Act. Commonly known as “Superfund”, it
was enacted by the US Congress on 11 December 1980. It created a tax on the chemical and petroleum industries
and provided broad Federal authority to respond directly to releases or threatened releases of hazardous substances
that may endanger public health or the environment.
Claims-made principle
Rule which says that if a claim is made during the period when a liability policy is in effect, the insurer must pay
regardless of when the event causing the claim occurred.
Compensatory remediation*
Any action taken to compensate for interim losses of natural resources and/or services that occur from the date of
damage occurring until primary remediation has achieved its full effect.
Competent authority
An administrative authority, as determined by national legislation, which shall be competent for the filing and
overseeing of claims for environmental damage pursuant to national legislation transposing the ELD. These
authorities should be entitled to recover the cost of preventive or remedial measures from an operator within a
reasonable amount of time.
Complementary remediation*
Any remedial measure taken in relation to natural resources and/or services to compensate for the fact that primary
remediation does not result in fully restoring the damaged natural resources and/or services.
Deductible
Amount of an insured loss specified in a policy that the insured has to bear before the insurer provides cover.
DIC
Difference in conditions. Extension to a master policy that allows a multinational company to standardise locally
insured policies by providing additional coverage for perils excluded in local policies as well as for other differences
in insurance conditions.
DIL
Difference in limits. Extension to a master policy that provides for the limit of liability under the master policy to be
applicable in all covered countries, as local policies will usually have lower limits.
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EASO
Environmental Assessment of Sites and Organisations. The basic aim of an EASO is to establish the relationship
between the environmental aspects of an enterprise or location, and the environmental issues (risks/opportunities)
and their ensuing business consequences (financial or other) as part of the preparations for a proposed business
transaction.
EIL
Environmental impairment liability policies. Frequently offered under this label is third party coverage for damages
caused to third party claimants by pollution conditions originating from the insured plant, including mitigation
costs. This type of policy, also marketed as a pollution legal liability policy (PLL), is written on a claims-made,
manifestation or discovery basis and it generally excludes NRDs, biodiversity damages and the on-site clean-up
obligations mandated by the competent authority.
ELD
Environmental Liability Directive. Directive 2004/35/EC of the European Parliament and of the Council of 21 April
2004 on environmental liability with regard to the prevention and remedying of environmental damage. The
ELD establishes a framework for environmental liability based on the “polluter pays” principle, with a view to
preventing and remedying environmental damage.
EMS
Environmental Management System. Organisational structure, responsibilities, practice, procedures, processes and
resources for implementing and maintaining environmental management.
Environmental damage
Damage to protected species and natural habitats, land and groundwater or surface water that has significant
adverse effects, namely on the favourable conservation of species and habitats, the ecological status and/or potential
of water, or land contamination which poses a significant risk to human health. Such damage is a measurable
adverse change or measurable impairment of a natural resource which may occur directly or indirectly.
ERA
Environmental Risk Assessment. An examination of the risks that may pose a threat of environmental damage to
ecosystems, animals and people. This examination is generally a scientific activity that involves data assessment for
the purpose of identifying and quantifying these risks.
Exposure
Susceptibility to loss. Exposure is defined by the type of value exposed, as well as the probability, severity and
possible financial extent of a loss.
First discovery/manifestation
Coverage trigger that bases insurance cover on the exact time when an injury, damage or other loss is discovered/
manifested.
GMOs
Genetically Modified Organisms. Also known as genetically engineered organisms (GEOs). Organisms whose
genetic material has been altered using genetic engineering techniques.
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Gradual pollution
Environmental damage that occurs over a period of time, eg seepage, and is not caused by a sudden and accidental
event such as a fire, explosion, flood, etc.
Groundwater
Water beneath the earth’s surface in the spaces between soil particles and rock surfaces, including all water
covered by the Water Framework Directive (WFD) 2000/60/EC or wherever so provided in national legislation.
GTPL
General third party liability. The object of this insurance is the insured’s civil liability to compensate third parties for
injury or damage to property suffered by them, and in some cases for financial losses incurred by them, arising from
the business activity or property ownership of the insured party.
Hazard
A specific situation that increases the probability of the occurrence of loss arising from a peril, or that may influence
the extent of the loss.
Imminent threat*
A sufficient likelihood that environmental damage will occur in the near future.
Insured
Person, persons or entity whose risk of specified loss or losses resulting from a peril is protected by an insurance
policy.
Insurer
The company offering insurance coverage against risk of future loss as is specified in the relevant insurance
policy.
Interim losses*
Losses that result from the fact that damaged natural resources and/or services are not able to perform their ecological
functions or provide services to other natural resources or to the public until the primary and complementary
remedial measures have taken effect. It does not consist of financial compensation to members of the public.
IPPC
Integrated Pollution Prevention and Control. The European Council Directive 96/61/EC of 24 September 1996
concerning integrated pollution prevention and control is about minimising pollution from various industrial
sources throughout the EU. It has been amended four times since it entered into force and was recently codified
as Directive 2008/1/EC.
Local policy
An insurance agreement that covers local activities of an insured in a specific state (eg the local subsidiary of a
multinational parent company).
Master agreement
An insurance contract that covers a multinational parent company for its international activities.
MPL
Maximum probable loss.
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MTPL
Motor third party liability. Third party liability insurance that applies to civil liability in respect of the use of
vehicles.
Multinational programme
An insurance programme composed of a master policy issued in the country of the head office and local
policies issued in the countries of branches, that applies difference in conditions (DIC) or difference in limits (DIL)
concepts.
NRD
Natural Resource Damage. A damage affecting naturally occurring substances that are considered valuable in their
relatively unmodified natural form.
Occurrence
An event that results in an insured loss. In some lines of business, such as liability, an occurrence is distinguished
from accident in that the loss does not have to be sudden and fortuitous and can result from continuous or
repeated exposure that results in bodily injury or property damage neither expected nor intended by the insured.
Operator*
Any person (natural or legal, private or public) who operates or controls an occupational activity or, where it is
provided in national legislation, to whom decisive economic power over the technical functioning of such an
activity has been delegated.
Pathway
The mechanism or route by which a harmful substance comes into contact with or otherwise affects a receptor,
namely via groundwater, surface water or air. The pathway is the second stage of the source-pathway-receptor
relationship.
Permit defence*
Where environmental damage is caused by an emission or event expressly authorised by, and fully in accordance
with the conditions of, an authorisation conferred by or given under EU member state legislation.
PI
Professional Indemnity. This insurance provides cover for businesses in the event that legal action is taken against
them by third parties claiming to have suffered a loss as a result of advice given to them.
Policy
A contract effecting insurance — a promise of compensation for specific, potential future losses resulting from a
peril — including all clauses, riders and endorsements attached.
Policy triggers
Principles agreed in an insurance policy that determine the scope of indemnity in time (eg first discovery/
manifestation, claims made).
Preventive measures*
Any measures taken in response to an event, act or omission that has created an imminent threat of environmental
damage with a view to preventing or minimising that damage.
Primary remediation*
Any remedial measure that returns the damaged natural resources and/or impaired services to, or towards, baseline
condition.
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manufacturer merchant or distributor because of bodily injury or property damage resulting from the use of an
insured product.
Property insurance
Property insurance compensates an insured whose property is stolen, damaged or destroyed by a covered peril.
RCRA
Resource Conservation and Recovery Act, 42 U.S.C. §§6901-6992k. This piece of US legislation aims to protect
the public from harm caused by waste disposal, encouraging reuse, reduction and recycling to clean up spilled or
improperly stored wastes.
Receptor
The entity (human, animal, plant, water) that is vulnerable to the adverse effects of the harmful substance. The
receptor is the third and final stage of the source-pathway-receptor relationship.
Red List
Also known as “IUCN Red List”. An inventory of the global conservation status of plant and animal species. There
are nine categories in the IUCN Red List system, among which three are considered to be “threatened categories”
(critically endangered, endangered and vulnerable).
REMEDE project
Resource Equivalency Methods for assessing Environmental Damage in the EU. REMEDE is designed to support
Annex II of the ELD which lists different methodologies that can be used for this common framework. The goal
of the REMEDE project is to develop, test and disseminate methods for determining the scale of the remedial
measures necessary to adequately offset environmental damage.
Remedial measures*
Any action or combination of actions, including mitigating or interim measures, to restore, rehabilitate or replace
damaged natural resources and/or impaired services, or to provide an equivalent alternative to those resources or
services as foreseen in Annex II of the ELD.
SAC
Special Area of Conservation. A SAC is defined in EU Directive 92/43/EEC of 21 May 1992 on the conservation of
natural habitats and of wild fauna and flora, also known as the EC Habitats Directive. SACs complement Special
Protection Areas (see SPA below) and together form a network of protected sites across the EU called Natura
2000.
Seveso II
European Council Directive 96/82/EC of 9 December 1996 on the control of major-accident hazards involving
dangerous substances. This Directive aims to improve the safety of sites containing large quantities of dangerous
substances. It is named after the major industrial accident that occurred on 10 July 1976 in a small chemical
manufacturing plant close to Milan, Italy.
SHAPE-RISK
Sharing Experience on Risk Management (Health, Safety and Environment). A European Commission initiative to
establish the basis for the sustained development of European industry, and to do so by optimising the application
of methods of risk management.
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Environmental liability
SPA
Special Protection Area. A designation under the EU Directive 79/409/EEC of 2 April 1979 on the conservation of
wild birds . Together with Special Areas of Conservation or SACs, the SPAs form a network of protected sites across
the EU called Natura 2000.
Surface water
Water on the surface of the earth, such as in lakes, rivers, streams, ponds and springs, including all water covered
by the Water Framework Directive (WFD) 2000/60/EC or wherever so provided in national legislation.
Third party
A party that is not a party to the insurance policy. Parties to the policy are typically the insurer and the insured. Third
parties may include private parties and government entities enforcing regulations.
WFD
Water Framework Directive. Directive 2000/60/EC of the European Parliament and of the Council of 23 October
2000 establishes a framework for Community action in the field of water policy to improve water quality (including
marine waters up to 1.6 kilometre from shore) by 2015.
* Note that these definitions coincide with those of the ELD, and that the national legislation of various EU
member states transposing this directive may differ slightly. Please see Annex 10.1 for details of each member
state’s transposition law.
72 | CEA
Environmental liability
Bernard Tettamanti
Director, casualty underwriting
Swiss Re
Mythenquai 50/60
8022 Zurich, Switzerland
CEA | 73
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