Memorandum submitted by the British Insurance
Brokers' Association (ELD 07)
ENVIRONMENT LIABILITY
DIRECTIVE: OPTIONS
FOR IMPLEMENTING
IN ENGLAND,
WALES AND
NORTHERN IRELAND
The British Insurance Brokers Association (BIBA)
is the UK's leading general insurance intermediary organisation.
We represent the interests of insurance brokers, intermediaries
and their customers, and have partner members from leading companies
in the insurance industry.
BIBA decided that it should not attempt to co-ordinate
a response from its membership to the specific 24 questions set
out in the consultation document. The main reasons for reaching
that decision were as follows:
(a) The unfortunate timing of the release
of the consultation document and the deadline for responses to
be received by. This period in part taking place over the Christmas
holidays but more relevant, bridging what is still a very heavy
renewal period for many of our memberships Client's policies.
(b) BIBA's ability to co-ordinate a response
was further impacted by the lack of publicity sought by DEFRA
to encourage responses.
(c) At BIBA we believed our key role was
in encouraging our members' clients, the potential insured, to
engage in the consultation as opposed to attempting to represent
or co-ordinating their response. This is because our clients span
all services and industries so it would be unlikely that we would
provide a single clear input and we did not wish to belittle the
impact of numerous submissions by presenting these as a single
vote. In addition to encouraging our members clients to respond
as individuals we suggested to those that could not that they
consider responding through an appropriate trade association's
submission or through AIRMIC.
BIBA represents brokers from throughout the
UK and we believe that the discretions allowed to Member States
under the directive itself will already result in diversity in
laws between different member states rather than to bring about
a harmonised approach to environmental matters. Whilst we appreciate
that Scotland, Wales and Northern Ireland, due to devolvement
legislation, can elect to embrace different options, diversity
in law makes it difficult for an insurance product to emerge to
respond to the risks and potential liabilities which our clients
face. It would be preferable if a consensus could be reached,
particularly as many companies are now multi national.
Given the statute will not be finalised until
after 30 April 2007, is it intended that the law, once passed,
will have a retroactive date?
We were disappointed that no specific questions
were put into the consultation in regard to Article 14(2) such
as to seek opinion as to whether the time and period was adequate
to measure the matters for which 14(2) requires a report returned,
or to mention that statutory environmental insurance had been
a facet of earlier drafts of the ELD and to ask respondents if
they would favour this approach in order to create a level playing
field in regard to them and their competitors?
On the subject of financial security we would
like the Government to share with DEFRA and the ABI what their
intended approach will be to discharge their duties in regard
to Article 14(1). At this time we do not believe that Government
appreciate that only a few entities consider environmental risk
management to identify, assess and control their real potential
and perceived environmental risks and liabilities to known and
unknown issues. This applies to large organisations as well as
SME's. BIBA encourages the Government to maintain a dialogue with
the specialist insurers in this field (currently represented by
ACE, AIG, Chubb and XL) through the ABI and with potential insureds
through BIBA, and appropriate trade associations, to work on increasing
awareness of environmental risks and liabilities, and through
this to take steps to develop appropriate instruments for financial
security and risk transfer thereof.
Many of the questions require answers on issues
that are so basic to financial security instruments including
insurances, that it is impossible for the insurance market to
develop products until these are finalised. Examples include decisions
of a strict and fault based liability, proportionate versus joint
and several liability and permit defences. We have however addressed
our comments from the point of view of encouraging an insurance
market to develop.
Of the options we believe the insurance market
would prefer the minimum of strict liability options as opposed
to fault based ones, so we are largely in favour of the preferred
options.
Consequently, BIBA call upon the Government
to ensure that as a minimum, the following areas fundamental to
successful operation of the Directive are incorporated:
(a) Same options across the whole of the
United Kingdom.
(b) Proportionate liability rather than joint
and several liability.
(c) Liability based upon fault where this
is an option.
(d) Some controls on remediation work and
therefore on costs.
In summary BIBA, through its members, are anxious
to promote environmental liability insurance and assist in creating
markets where appropriate. BIBA would be happy to discuss the
content of this report in due course.
April 2007
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