Tort and Insurance Law Vol. 14. Edited by the European Centre of Tort and Insurance Law

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2 Tort and Insurance Law Vol. 14 Edited by the European Centre of Tort and Insurance Law together with the Research Unit for European Tort Law of the Austrian Academy of Sciences

3 Michael Faure Ton Hartlief (eds.) Financial Compensation for Victims of Catastrophes A Comparative Legal Approach With Contributions by Tola Amodu Suzanne A. Bratis Michel Cannarsa Filippo A. Chiaves Isabelle C. Durant Michael Faure Ton Hartlief Dagmar Hinghofer-Szalkay Michael Huber Bernhard A. Koch Fabien Lafay Ulrich Magnus Alberto Monti Olivier Moréteau Siv Nyquist Erik Persson Robert L. Rabin Roger Van den Bergh SpringerWienNewYork

4 European Centre of Tort and Insurance Law Landesgerichtsstraße Vienna, Austria Tel.: Fax: ectil@ectil.org Austrian Academy of Sciences Research Unit for European Tort Law Landesgerichtsstraße Vienna, Austria Tel.: Fax: etl@oeaw.ac.at This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically those of translation, reprinting, re-use of illustrations, broadcasting, reproduction by photocopying machines or similar means, and storage in data banks Springer-Verlag/Wien Printed in Germany Springer-Verlag Wien New York is part of Springer Science + Business Media springeronline.com Product Liability: The publisher can give no guarantee for the information contained in this book. This also refers to that on drug dosage and application thereof. In each individual case the respective user must check the accuracy of the information given by consulting other pharmaceutical literature. Typesetting: Composition & Design Services, Minsk, Belarus Printing and binding: Strauss GmbH, Mörlenbach, Germany Printed on acid-free and chlorine-free bleached paper SPIN: CIP data applied for ISBN-10 ISBN-13 ISSN SpringerWienNewYork SpringerWienNewYork

5 Table of Contents INTRODUCTION... 1 Part I. Problem Definition... 1 Part II. Goal of this Book... 2 Part III. Methodology... 3 Part IV. Framework of the Project... 4 Part V. Collaborators in this Project... 5 Part VI. Structure of this Book... 5 Part VII. Words of Thanks... 6 COUNTRY REPORTS... 7 Austria (Dagmar Hinghofer-Szalkay and Bernhard A. Koch)... 7 Part I. Introduction... 7 Part II. Information on Specific Compensation Systems... 8 I. Tort... 8 A. Fault Liability... 8 B. Strict Liability... 9 C. State Liability D. Procedure II. Social Security III. The Austrian Fund for Catastrophes A. Introduction B. Financing of the Fund C. Two Examples Lower Austria Salzburg D. Summary Procedure Heads and Amount of Damages Rules Preventing Cumulation IV. Private Insurers A. First-Party Insurance B. Third-Party Insurance C. Catastrophe Management Catastrophe Management in General Mass Collisions in Particular... 17

6 VI Table of Contents Part III. Detailed Information on Specific Catastrophes I. Natural Catastrophes A. Galtür Avalanche B. Flood Action by the Federal Government Details on Lower Austria Details on Salzburg Private Compensation State Liability II. Man-Made Catastrophes A. Lassing Mine Collapse B. Bergisel Panic C. Kaprun Ski Train Fire Part IV. Conclusions List of References Belgium (Isabelle C. Durant) Part I. Introduction Part II. Method Part III. General Scope of the Compensation System I. Patchwork of Regulations II. First Overall Survey of the Various Rules A. Tort Law B. Insurance Law Federal Legislation Flemish Legislation Brussels Legislation Walloon Legislation C. Social Security D. Solidarity Part IV. More Detailed Information I. Social Security System A. Workmen s Compensation Law B. Health Insurance II. Tort Law A. Three Basic Requirements Damaging Event Damage Causal Link B. Compensation General Rule: Compensation of the Entire Certain Loss Heads of Damage III. Natural Disasters A. General Overview... 59

7 Table of Contents VII B. Summary of the Legal System Concerning Public Disasters C. Summary of the Legal System Concerning Natural Disasters D. Weaknesses of the Actual System and New Prospects Part V. Procedures I. Social Security System A. Charter of the Socially Insured B. The Workmen s Compensation Law II. Tort Law III. Insurance Law A. General Rule B. Fire Insurance Property Insurance IV. Natural Disasters Part VI. Combination of the Various Systems Part VII. Financing Part VIII. Amounts of Damages Part IX. Empirics Part X. General Comments List of References France (Michel Cannarsa, Fabien Lafay, and Olivier Moréteau) Part I. Introduction Part II. General Scope of the Compensation System I. Physical Injury II. Damage to Property Part III. More Detailed Information I. Social Security II. Insurance A. Insurance Cover of Natural Catastrophes B. Insurance Cover of Man-made Catastrophes III. Compensation Funds IV. Tort Law A. Private Law Liability Based on Fault Strict Liability B. Public Law Part IV. Procedure I. Insurance Schemes II. Compensation Funds III. Tort Law A. Interlocutory Proceedings B. Limitation Periods Part V. Financing I. Social Security Contributions and Insurance Premiums

8 VIII Table of Contents II. Reassurance and State Guarantee III. Funding the Compensation Funds Part VI. Heads and Amounts of Damages I. Under Tort Law A. Recoverable Losses Property Damage Pecuniary Losses (past, actual and future) Damnum Emergens Lucrum Cessans Non-Pecuniary Losses B. Lump Sums, Periodical Payments, Interim Payments II. Recoverable Losses under Specific Regimes Part VII. Rules Preventing Cumulative Benefits I. Social Security Benefits II. Insurance Companies Benefits III. Benefits Received from Compensation Funds Part VIII. Empirics I. The Tempests of December II. The Sinking of the Tanker Erika III. The Toulouse AZF Explosion IV. The Rhone Flood of December Part IX. Conclusion List of References Germany (Ulrich Magnus) Part I. Introduction Part II. General Scope of the Compensation System Part III. Specific Regulations I. Ad hoc Legislation II. Tort Law A. Strict Liability B. Fault Liability III. Insurance Law A. Private Insurance Law B. Social Insurance Law IV. Further Possible Sources A. Liability for Acts of State Officials B. Further Possible State Liability Part IV. Procedural Questions I. Distribution of Means under the Flutopferhilfesolidaritätsgesetz II. Normal Tort Law Procedure III. Private Insurance Regulation Procedure IV. Social Insurance Regulation Procedure Part V. Cumulation of Claims?

9 Table of Contents IX Part VI. Financing Part VII. Heads and Amounts of Damages Part VIII. Empirics Part IX. Reform Proposals; Criticism I. Reform Proposals II. Criticism Part X. Concluding Remarks List of References Italy (Alberto Monti and Filippo Andrea Chiaves) Part I. Introduction Part II. The General Framework of Disaster Law in Italy Part III. Legislation, Rules and Regulations I. The Law of Torts II. Dangerous Activities III. Nuisance IV. Moral Damages V. Specific Issues: Mass Infections VI. Specific Issues: Smoking VII. Class Actions? VIII. Rules of Procedure Part IV. Mass Torts and Environmental Protection Issues I. Mass Torts II. Environment Protection A. The Environment Act (Law No. 349 of 1986) B. Other Statutory Provisions C. Legal Qualification of Environmental Damage as Health Injuries D. Nature of Liability. Standing to Sue Part V. State Subsidizing. Special Laws and Extraordinary Government Contributions Part VI. The European Union Solidarity Fund Part VII. Private Insurance I. Private Insurance and Environment Issues II. Private Insurance and the Costs of Catastrophes Part VIII. The Major Italian Disasters and Catastrophes I. The Vajont Disaster (9 October 1963) II. The Asti Flood (4 September 1948) III. The Cermis Accidents (9 March 1976 and 3 February 1998) IV. The Seveso Dioxin Cloud (10 July 1976) V. The Stava Val di Fiemme Disaster (19 July 1985) VI. Floods, Fires, Earthquakes, Droughts and Oil Spills Part IX. Future Perspectives in the Italian Disaster Recovery System I. Shared Views II. The Mixed System: Foreign Models

10 X Table of Contents III. ISVAP s Proposals IV. Law Reform Bills Introducing Mandatory Insurance Coverage for Disasters A. Reform Bill No. 1164/ B. ANIA s Mapping Plan C. Reform Bill No. 235/ D. Reform Bill No. 533/ E. ANIA s 2003 Proposals and Government s Current Reform Plan Part X. Conclusions List of References The Netherlands (Michael Faure and Ton Hartlief) Part I. Introduction Part II. General Scope of the Compensation Part III. More Specific Information I. Liability Law II. Social Security III. Insurance IV. WTS V. Compensation Funds Part IV. Heads of Damage and Accumulation of Compensation Part V. Empirical Evidence I. Legionella in Bovenkarspel II. Flooding III. Enschede IV. Volendam Part VI. Criticisms and Reform I. Criticism II. Reform List of References Sweden (Siv Nyquist and Erik Persson) Part I. General Scope of the Compensation System Part II. Detailed Information Part III. Procedure to Obtain Compensation for Damage I. Personal Injuries A. Social Insurance Administration B. Costs for Medical and Dental Care and Medicines from the Social Insurance C. Loss of Income D. Support for the Disabled from the Social Insurance E. Other Social Insurance Benefits in Case of Death F. The Work Injuries Insurance Act G. Support According to the Social Services Act

11 Table of Contents XI H. Compensation from Private Insurances for Personal Injuries I. Criminal Injuries Compensation II. Compensation for Property Damage III. Particular Compensation Mechanism for Catastrophes A. Insurances According to the Swedish Environmental Code Environmental Damage Insurance Environmental Clean-up Insurance B. Income Tax Act C. The Nuclear Liability Act D. Law on Extraordinary Occurrences in Peacetime in the Municipality and County Council E. The Reformed Rescue Service Act F. The Motor Traffic Damage Act G. Responsibilities for Dams at Hydroelectric Power Stations Part IV. Administrative Procedure and Appeals I. Elements of Proof II. Public Legal Aid and Private Legal Expenses Insurance A. Private Legal Expenses Insurance B. Public Legal Aid Part V. Coordination or Cumulation Part VI. Discussion Part VII. Heads and Amounts of Damages I. Third Party Insurance Part VIII. Empirics I. Discotheque Fire in Gothenburg II. The Ferry Estonia III. Chernobyl IV. EU Summit Meeting V. Agricultural Damage Part IX. Conclusions List of References United Kingdom (Michael Huber and Tola Amodu) Part I. Introduction Part II. Conceptual Concerns I. State, Insurance and Law II. Catastrophe, Hazard or Disaster? Part III. The General Scope of the Compensation Regime Part IV. The British Compensation Regime I. Social Security in the UK II. Social Security Benefits and Insurance

12 XII Table of Contents A. Welfare or Social Security Entitlements for Industrial Injuries B. Compensating Man-made Catastrophes extra the Benefits System III. Compensating Natural Hazards Part V. Compensation Funds I. Flood II. Terrorism Part VI. Legal Procedures I. The Duty of Care II. The Liability of Public Bodies III. Access IV. Limitation of Actions Part VII. The Assessment of Damages in Tort Law I. The Recovery of Cumulative Benefits Part VIII. Procedures I. Insurance Schemes II. Fund Solutions III. Natural Hazards/Insurance Part IX. Financing Part X. New Developments I. Flood Insurance II. Terrorism after September III. Compensation Culture IV. Public Inquiries and Negotiations Part XI. Concluding Remarks List of References United States (Robert L. Rabin and Suzanne A. Bratis) Part I. Introduction I. The Role of Tort: Responsible Party II. Natural Disasters Part II. Social Welfare Legislation in the U.S.: General Disability Provisions I. The U.S. Social Security System: Background II. Disability Provisions: Eligibility Standards III. Benefit Levels, Treatment of Collateral Sources, and Funding IV. Administration V. Health Care Benefits VI. Concluding Observations Part III. Disaster Relief: The Role of the Federal Emergency Management Agency I. Introduction II. FEMA: Coordination with State and Local Entities A. The Role of Local Government

13 Table of Contents XIII B. The Role of State Government III. FEMA: Core Responsibilities A. Historical Overview B. Obtaining Federal Assistance C. The Federal Response Federal Personnel Available Types of Federal Assistance Provided for Individuals and Businesses Types of Federal Assistance Provided for Communities IV. Funding of FEMA and Coordination with Collateral Sources V. Concluding Observations Part IV. Insurance: The Intersecting Private/Public Sectors I. Introduction Part V. II. Types of Insurance Coverage Triggered by Disaster Events A. Nuclear Reactor Accidents: Price-Anderson Act B. Federal Terrorism Risk Insurance Act C. California Earthquake Authority D. National Flood Insurance Program III. Concluding Observations Three Case Studies of Compensation for Catastrophic Loss I. The September 11 Victim Compensation Fund A. The September 11 Victim Compensation Fund: Statutory Framework B. The September 11 Victim Compensation Fund: Regulatory Guidelines Collateral Source Offset Economic Loss Non-economic Loss Resolving Tensions: A Hybrid Model II. Compensating Hurricane Damage: Hurricane Andrew A. Role of Private Insurance Hurricane-related Losses Compensated by Insurance Uncompensated Losses B. Impacts on the Insurance Industry Residential Property and Casualty Joint Underwriting Association Florida Hurricane Catastrophe Fund C. Role of FEMA D. Concluding Observations

14 XIV Table of Contents III. Catastrophic Loss in Tort: The Case of Commercial Airline Crashes A. Applicable Tort Principles B. Background Social Welfare and Insurance Systems C. Empirical Analysis of the Compensation System Part VI. Critical Assessment of the System List of References COMPULSORY CATASTROPHE EXTENSION OF FIRST PARTY PROPERTY INSURANCE FROM A COMPETITION POLICY PERSPECTIVE (Roger Van den Bergh) Part I. Introduction Part II. The Anti-Competitive Effects of a Compulsory Catastrophe Coverage Extension of First Party Property Insurance I. The French Law and the Italian Proposal II. Competition Law: The Prohibition of Cartel Agreements and Abuses of a Dominant Position III. The Restrictions of Competition Resulting from a Compulsory Extension of First Party Property Insurance IV. Compulsory Catastrophe Extension of First Party Property Insurance and the Group Exemption for the Insurance Industry V. The State Compulsion Defense Part III. Compulsory Catastrophe Extension of First Party Property Insurance Re-assessed: Efficiency Defense or Solidarity Exception? I. Coverage of Catastrophic Loss in a Competitive Insurance Market and the Problem of Adverse Selection II. The Need to Cope with Adverse Selection and the Conditions for an Exemption from the Cartel Prohibition A. The First Condition: Improvement of Production or Distribution, or Technical or Economic Progress B. Benefits to Consumers C. The Proportionality Requirement D. A Sufficient Degree of Remaining Competition III. The Solidarity Exception Part IV. Conclusions List of References

15 Table of Contents XV COMPARATIVE AND POLICY CONCLUSIONS (Michael Faure) Part I. Introduction Part II. General Compensation System I. Austria II. Belgium III. France IV. Germany V. Italy VI. The Netherlands VII. Sweden VIII. United Kingdom IX. United States X. Summary Part III. Social Security Part IV. Tort Part V. Insurance I. General II. Austria III. France IV. Belgium V. Germany VI. Italy VII. The Netherlands VIII. Sweden IX. United Kingdom X. United States XI. Summary Part VI. Compensation Funds Part VII. Procedural Aspects Part VIII. Financing I. General II. Financing of Funds III. Financing of Insurance Solutions IV. Public-Private Partnerships V. Summary Part IX. Damages Part X. Cumulation Part XI. Reforms and Criticisms Part XII. Critical Economic Analysis I. Liability and Liability Insurance A. Importance B. Tort Law as Deterrent C. Compulsory Insurance II. First Party Insurance A. Market Failure? B. Compulsory Insurance?

16 XVI Table of Contents C. Outlook III. Public Intervention A. Government as (Re-)Insurer or Santa Claus? B. Fund or Ad Hoc? IV. Policy Conclusions List of References ANNNEX: QUESTIONNAIRE Part I. Introduction Part II. Method Part III. General Scope of the Compensation System Part IV. More Detailed Information Part V. Procedure Part VI. Cumulation Part VII. Financing Part VIII. Heads and Amounts of Damages Part IX. Empirics Part X. Reforms/Criticism INDEX PUBLICATIONS