Workshop Implementation Efficiency of ELD Brussels, 10 July Background Paper

Transcription

1 Wrkshp Implementatin Efficiency f ELD Brussels, 10 July 2009 Backgrund Paper THIS PAPER IS WORK IN PROGRESS 1. INTRODUCTION BIO Intelligence Service (BIO IS) currently carries ut a study n The Implementatin Efficiency f the Envirnmental Liability Directive (ELD) and related Financial Security Issues fr the Eurpean Cmmissin DG ENV in cllabratin with Stevens & Bltn LLP. It fllws up wrk cnducted in 2008 under the cntract study Financial Security in ELD whse results can be dwnladed here: The current study aims at prviding a first insight int the practical implementatin f the ELD with a particular fcus n questins f financial security. Thereby its bjective is t prvide the Cmmissin with the necessary infrmatin t meet the reprting requirements as set in Article 14(2) f the Directive. T prvide the best available infrmatin fr the reprt, the results f the first study will be updated and cmpleted t in rder t: Analyse the different appraches taken by EU Member States (MS) regarding financial security issues Cmplete the available infrmatin n the currently available ELD-related insurance prducts as well as alternative financial security instruments and ptins Prvide infrmatin n Eurpean ELD cases t get first ideas f the actual efficiency f the implementatin f the Directive in terms f remediatin Analyse further the psitin f peratrs regarding the implementatin f the ELD (here emphasis will be put in businesses, but als in SMEs that may be subject t ELD) 2. THE WORKSHOP This wrkshp shuld serve as a platfrm fr the different stakehlder grups t cme tgether and discuss the ELD implementatin and its impacts. On behalf f the Eurpean Cmmissin, MS ELD experts, re/insurers, brkers, prviders f alternative financial security instruments, peratrs, experts and ther interested parties and stakehlders (NGOs) are invited t exchange their experiences. July 2009 Wrkshp Implementatin Efficiency f ELD 1

2 Fllwing the wrkshp, individual presentatins and cntact details fr further feedback will be prvided t wrkshp participants n a dedicated wrkshp webpage. Further details will be sent t participants in due curse. 3. PRESENTATION OF PRELIMINARY FINDINGS This sectin prvides first insights int the findings f this study. As nne f the stakehlder cnsultatins have been cmpleted at this pint these findings remain preliminary. MEMBER STATE CONSULTATION Member State (MS) ELD experts were cntacted in rder t update and cmplete infrmatin gathered during the study n Financial Security in ELD, Areas f special interest included features f natinal ELD transpsitins; views n different financial security instruments with a fcus n insurance prducts; further infrmatin n mandatry financial security schemes (if applicable); and infrmatin n the ELDimplementatin in practice, including ELD cases. Member States that had already answered a questinnaire fr the 2008 study were interviewed ver the phne t update and cmplete the infrmatin previusly prvided. At the time f writing, 12 ut f 15 MS cncerned have been interviewed. Thse MS that had nt answered the previus questinnaire were sent a rewrked cpy that was adapted t the new fcus f the study. S far nly ne respnse has been received, thus a fllw-up reminder has been send. The MS that have s far answered in the cntext f this cnsultatin are Austria, Belgium (Brussels regin), Bulgaria, Cyprus, Estnia, France, Germany, Hungary, Ireland, Netherlands, Pland, Slvakia, and Sweden. Regarding the discussin f preliminary findings belw, it shuld therefre be nted that they are nly based n infrmatin prvided by a limited number f MS. The discussin des nt reflect the full spectrum f findings frm this cnsultatin but nly the mst cmplete and relevant fr this wrkshp. 1. Mst cmmn features f specific natinal transpsitins The ELD leaves a large degree f flexibility t MS in transpsitin and thus implementatin f the ELD f which a number f MS have made full use. The mst cmmnly applied f the cuntry-specific transpsitin features are discussed belw: Regarding pssible defences, fur MS indicated that they d nt fresee a state f the art defence (Austria, Germany, Hungary, and Sweden) and six d nt fresee a permit defence (Austria, Bulgaria, France, Germany, Hungary, and Sweden). The case f Spain is particular in the sense that state f the art and permit defences allw peratrs t recver the csts r reparatry measures nce fully implemented, but they d nt exempt the peratr frm taking them. The Netherlands n the ther hand d nt fresee these exemptins, but d allw fr sme discretin in the cntext f a check f reasn. A number f MS als intrduced a scpe f bidiversity that is wider than that f the ELD. This is the case fr Estnia, Pland, Cyprus, Belgium (Brussels), Hungary, and July 2009 Wrkshp Implementatin Efficiency f ELD 2

3 Spain. Finally, Austria, Bulgaria, Estnia, Hungary, and Pland intrduced an bligatin fr the cmpetent authrity t take remedial actin if the peratr is nt identifiable r nt in a psitin t carry ut the necessary measures. Table 1: Mst cmmn cuntry-specific ELD transpsitin features (number f MS): 2. Develpment state f natinal envirnmental insurance market MS were asked t describe the current level f develpment f the ELD-related insurance market in their cuntry by chsing between three different levels: Basic meaning that many liabilities under the ELD still remain insurable. Gd meaning that cver exists fr mst f the liabilities under the ELD but nt fr all. Advanced meaning that cver exists generally fr all liabilities under the ELD. Figure 1: Current perceived develpment f the envirnmental insurance market Basic Gd Advanced Belgium Bulgaria Cyprus Estnia Ireland Pland Sweden France Germany July 2009 Wrkshp Implementatin Efficiency f ELD 3

4 3. Perceived main reasn hindering further develpment f the envirnmental insurance market As transpsitin f the Directive prgresses, legal uncertainty n lnger seems t be cnsidered as a reasn that hinders the further develpment f the envirnmental insurance market in Eurpean MS. Hwever, mre than half f the MS cnsulted cnsider that lack f knwledge by peratrs and unavailability f data are the main bstacles t a further develpment f the envirnmental insurance market in their cuntries (Cyprus, Bulgaria, Estnia, France, Ireland, Pland, and Spain). Other issues that were named as bstacles are the lack f knwledge n the side f brkers, plitical resistance t impse extra burdens n peratrs, and difficulties in premium and risk calculatin. 4. Availability f clear guidelines/mdels fr damage assessment and remediatin decisins Several Member States pint t the REMEDE tlkit (Resurce Equivalency Methds fr Assessing Envirnmental Damage in the EU) as a pssible surce f infrmatin regarding guidelines r mdels fr calculatins relevant t the ELD (e.g. guidance n hw t calculate the cst f cmpensatry remediatin, r t assess natural resurce damage, risk indexes, etc.). A number f MS have integrated guideless n methdlgy, values and csts int their laws r are planning t d s in the future. At the current stage, hwever, mst MS that were cnsulted d nt have such guidelines r mdels in place. France is currently develping guidelines n envirnmental damage assessment t facilitate the understanding f ELD requirements. It is planned that tw versins f this guideline will be distributed, ne targeted at reginal cmpetent authrities (t help them assess damages) and anther ne targeted at peratrs. Spain is wrking n a decree that is meant t prvide a methd t determine the way damage must be assessed (including bidiversity damage) and restred. It shuld als include prvisins n the calculatin f cmpensatry remediatin. INSURANCE SECTOR CONSULTATION In rder t gain further insight int the develpment f the ELD-related insurance market, re/insurers and brkers were cntacted fr in-depth interviews. Cmpanies were chsen that were either leaders in this market r that had decided nt t enter this market in rder t reflect viewpints frm bth ends f the spectrum. At the time f writing, 13 in-depth interviews with insurers, ne with a reinsurer, and tw with brkers have been cnducted. The results prtrayed belw remain preliminary until all interviews have been cncluded. They d nt reflect the full spectrum f findings frm this cnsultatin but are the mst cmplete and relevant fr this wrkshp. 1. Are all activities listed in Annex III cvered? Whereas certain insurance cmpanies in cuntries such as France and Slvakia state that their prducts cver all activities listed in Annex III f the ELD, this is nt the case fr mst prducts that were discussed with insurers and brkers July 2009 Wrkshp Implementatin Efficiency f ELD 4

5 during the cnsultatin. The mst cmmnly named exclusin frm insurance cver relates t the handling f GMOs. Other sectrs that were named as nt being cvered by currently existing ELD-related insurance prducts include waste management and dispsal sites, the use f chemicals and ther hazardus prducts in the agricultural sectr, and deep mining. It shuld be nted that in many cases these sectrs are nt explicitly excluded in the insurance prduct. It is rather a nn-written plicy by the cmpany s underwriters that these sectrs will nt be cvered. 2. What issues remain uncvered under existing insurance plicies? In rder t evaluate the current insurability f ELD-related liabilities, insurers were asked whether their existing prducts cver the fllwing: sudden and accidental events nly; sudden and accidental as well as gradual events; primary remediatin; cmplementary remediatin; cmpensatry remediatin; crss-brder damage; envirnmental damage caused by state-f-the-art r expressly authrized activities (in cuntries where these damages are nt exempt frm the ELD scpe). The current results shw that cverage differs significantly acrss insurance cmpanies. Whereas several f them stated that their prducts cver all f the abve-mentined liabilities, gradual events and state-f-the-art r expressly authrized activities were named mst ften as currently uninsurable under their plicies by the ther cmpanies. 3. Availability f reinsurance At the time f writing there is n clear picture f hw difficult it is fr insurers t find reinsurance fr their ELD-related prducts. Furthermre, there is n clear link between a MS and its insurers assessment f reinsurance availability. Insurers describe this task frm difficult t easy acrss the different MS. Hwever, nne f the insurers that were cnsulted stated that it was impssible t find reinsurance cver. It shuld als be nted that there are insurers which reprt t cver all f the abve-mentined ELD-related liabilities and t have n majr difficulties in finding reinsurance. 4. Prduct uptake The assessment f the current uptake f the newly develped ELD-related insurance prducts ranges frm disappinting t very gd. It can be nted that the very negative assessment f the prduct uptake s far slely came frm stakehlders frm the UK. On the ther side f the spectrum, the nly ntin f a very psitive uptake came frm a German insurer. A number f interviews did nt reply t this questin n the grunds that the prducts were still t new t judge their uptake. July 2009 Wrkshp Implementatin Efficiency f ELD 5

6 Anther result f this questin is that currently n crrelatin can be established between the uptake f prducts in a certain cuntry and its financial security regime, i.e. whether there is a mandatry financial security scheme in place r nt. 5. Increase in prduct uptake Accrding t the current findings, the mst effective measure t increase the uptake f ELD-related insurance prducts is believed t be the ccurrence f a big ELD case that will be reprted n in the media. Operatrs as well as brkers that are currently nt very much aware f ELD-related liabilities r wh decided t ignre these, wuld becme mre aware f the need t cver these liabilities this way. The secnd and third mst imprtant measures t increase uptake are perceived t be an increase in the level f cmpetence f brkers and an imprved cmmunicatin f the Cmpetent Authrity abut the ELD. Table 2: Mst effective measure t increase uptake f new insurance prduct July 2009 Wrkshp Implementatin Efficiency f ELD 6

7 6. Sectrs with highest rate f ELD-related insurance uptake Accrding t current findings, the sectrs with the highest number f ELDrelated insurance plicies taken ut are the chemical and waste management sectr: Table 3: Sectrs with highest rate f ELD-related insurance uptake OPERATORS CONSULTATION In rder t gain further insight int the peratrs reactin t the ELD implementatin, a questinnaire has been develped. It has recently been sent t peratr assciatins in the fllwing sectrs: Agriculture Chemicals Cke and petrleum Fd and beverages Metals Water supply and treatment The main fcus f the questinnaire is the peratrs awareness f risk as well as their current and anticipated risk cverage (including insurance prducts and alternative financial security instruments). A number f peratrs that were already identified during the last study have been/will be cntacted directly. ELD CASES The imprtance f cmpiling infrmatin n actual ELD cases is f utmst imprtance t many f the invlved stakehlders. While Member States might be mre interested in an ELD case database fr the establishment f best practices in the handling f incidents, insurers are keen t cllect mre infrmatin n claims and lsses t imprve their risk July 2009 Wrkshp Implementatin Efficiency f ELD 7

8 calculatins. Insurers see the absence f cases as ne f the main reasns preventing them frm prducing better estimatins f the financial risk, therefre preventing further develpment f their prducts. Sme insurers said that a system such as the Eurpean rapid alert system called Rapex, which allws the rapid exchange f infrmatin between Member States n dangerus cnsumer prducts via central cntact pints and the Cmmissin is an example t fllw. The infrmatin that wuld need t be cllected wuld f curse differ, but the need fr such a Eurpe-wide database has been stressed multiple times. S far the creatin f an ELD case database has been slwed dwn by the lw number f cases that have been reprted as ptentially falling under the ELD in the different MS. Hwever, ptential cases have been reprted fr different Member States, such as Hungary, Pland, Spain, and the UK. ALTERNATIVE FINANCIAL SECURITY INSTRUMENTS Anther aspect f the stakehlder cnsultatin was the cllectin f infrmatin n financial security slutins fr ELD ther than insurance. Little infrmatin has been gathered n this tpic s far and prviders have prven difficult t identify. It can be nted, hwever, that bank guarantees are perceived as the mst imprtant alternative t insurance prducts t cver liabilities under the ELD. Further infrmatin n alternative financial security instruments will be presented in the Final Reprt f this study. July 2009 Wrkshp Implementatin Efficiency f ELD 8