The EU's new environmental liability Directive represents an enormous opportunity for environmental insurers, said Barlow Lyde & Gilbert partner Valerie Fogleman.
In a speech to the International Underwriting Association (IUA) Fogleman said: “The Directive will create new liabilities for those causing environmental damage and commercial operators will want to obtain cover against such liabilities.”
EU member states have three years in which to incorporate the environmental liability Directive into their own legislative system. Many of the more contentious elements are voluntary and can be implemented at the discretion of the individual member state, including the effectiveness of possible defences against liability.
Individual countries will, however, be required by the Directive to encourage the development of financial security instruments and markets in order to help ensure that any organisations found to have breached the Directive would be able to cover the cost of a clean-up operation.
Such financial security instruments might include letters of credit or trust funds, but most commonly insurance, said Fogleman.
“There are going to be opportunities for insurers and reinsurers,” she added. “The directive is not writing on a clean slate, but it is creating new liabilities, especially on damage to protected species and natural habitats.”
