Seguro de Responsabilidade Ambiental Environmental Risk and the Environmental Liability Directive

2. Seguro de Responsabilidade AmbientalEnvironmental Risk and the Environmental Liability Directive Duncan Spencer Vice President

3. Contents • What is Environmental Risk? • The Environmental Liability Directive • Lessons From the Rest of Europe • The Benefits of EIL Insurance • Key Issues

4. What is Environmental Risk?

5. Risk Assessment Receptor Pathway Source

6. Conceptual Model

7. Risk and Time Change in Use Liability Poor Management Leaking Drums Time

8. The Environmental Liability Directive • Law in Europe since April 2007 • Remediation of Environmental Damage; or • The Imminent Threat of Environmental Damage • Applies to; • serious damage to EU protected species and habitats or damage to Sites of Special Scientific Interest (SSSI) • serious damage to water • land contamination that adversely affects human health.

9. Remediation • Primary • Return land to original state • Physical remediation • Complimentary • Realise full consequence of the damage • Used when original site cannot be repaired • Compensatory • Replaces loss of interim benefit • Can be at the damaged or alternative site

10. Equivalency Analysis • Quantify Remediation • Economists + Ecologists together • Habitat Equivalency Analysis • Service x area x time • Resource Equivalency Analysis • Fish months • Allows time factor to be applied

11. Liability Regime Liability • Strict Liability for Annex III Activities • Fault Based for all others Defences • Force Majeure • Authorised Activities • Technology at that time

12. What Types of Company Should be Concerned? • EU IPPC Licensed Activities • Waste Management • Discharges to Surface and Groundwater • Abstraction of water • Manufacture and Use of Haz Mat • Transport of Haz Mat • Use and transport of GMO • Trans-boundary Shipment of Waste

13. Lessons from the Rest of Europe • DEFRA July 2010 • c. 50 ELD Claims Across Europe • Little information on events • In the UK, 4 claims • United Utilities • Residential Heating Oil • Small Chemical Spill • Road Tanker Spill • Many more non ELD Claims…

14. Augusta Roadstead, Sicily

15. Camargue, France

16. Corby, UK

17. Gaps in Existing Insurance • Gradual pollution • Historical pollution events • Bartoline case • Compensatory remediation • Complementary remediation

18. The Role of EIL Insurance • Ensures that risk is transferred • Allows the market to adjust • Covers: • ELD Liability • Third Party Liability • Pollution and Non Pollution Damage • Includes Insureds “business” • Provides Claims Support

19. Key Issues • Environmental risk includes both ELD & Pollution • Consideration should be given to: • Existing insurance • All liabilities (operational but also historical) • How would an event be managed • Therefore, insureds need to work with: • Broker • Consultant • Underwriter

20. Contact Details Duncan Spencer Liberty Mutual Insurance Europe Limited, London