2. Liberty International Underwriters Seguro de Responsabilidade Ambiental Environmental Risk and the Environmental Liability Directive Duncan Spencer Vice President

3. Liberty International UnderwritersContents What is Environmental Risk?What is Environmental Risk? The Environmental Liability DirectiveThe Environmental Liability Directive Lessons From the Rest of EuropeLessons From the Rest of Europe The Benefits of EIL InsuranceThe Benefits of EIL Insurance Key IssuesKey Issues

4. Liberty International Underwriters What is Environmental Risk?

5. Liberty International Underwriters Risk Assessment ReceptorReceptor SourceSource PathwayPathway

6. Liberty International Underwriters Conceptual Model

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

8. Liberty International Underwriters The Environmental Liability Directive Law in Europe since April 2007Law in Europe since April 2007 –Remediation of Environmental Damage; or –The Imminent Threat of Environmental Damage Applies to;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. Liberty International UnderwritersRemediation PrimaryPrimary –Return land to original state –Physical remediation ComplimentaryComplimentary –Realise full consequence of the damage –Used when original site cannot be repaired CompensatoryCompensatory –Replaces loss of interim benefit –Can be at the damaged or alternative site

10. Liberty International Underwriters Equivalency Analysis Quantify RemediationQuantify Remediation Economists + Ecologists togetherEconomists + Ecologists together Habitat Equivalency AnalysisHabitat Equivalency Analysis –Service x area x time Resource Equivalency AnalysisResource Equivalency Analysis –Fish months Allows time factor to be appliedAllows time factor to be applied

11. Liberty International Underwriters Liability Regime Liability Strict Liability for Annex III ActivitiesStrict Liability for Annex III Activities Fault Based for all othersFault Based for all othersDefences Force MajeureForce Majeure Authorised ActivitiesAuthorised Activities Technology at that timeTechnology at that time

12. Liberty International Underwriters What Types of Company Should be Concerned? EU IPPC Licensed ActivitiesEU IPPC Licensed Activities Waste ManagementWaste Management Discharges to Surface and GroundwaterDischarges to Surface and Groundwater Abstraction of waterAbstraction of water Manufacture and Use of Haz MatManufacture and Use of Haz Mat Transport of Haz MatTransport of Haz Mat Use and transport of GMOUse and transport of GMO Trans-boundary Shipment of WasteTrans-boundary Shipment of Waste

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

14. Liberty International Underwriters Augusta Roadstead, Sicily

15. Liberty International Underwriters Camargue, France

16. Liberty International Underwriters Corby, UK

17. Liberty International Underwriters Gaps in Existing Insurance Gradual pollutionGradual pollution Historical pollution eventsHistorical pollution events Bartoline caseBartoline case Compensatory remediationCompensatory remediation Complementary remediationComplementary remediation

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

19. Liberty International Underwriters Key Issues Environmental risk includes both ELD & PollutionEnvironmental risk includes both ELD & Pollution Consideration should be given to: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:Therefore, insureds need to work with: –Broker –Consultant –Underwriter

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

21. Liberty International Underwriters