3. ELD transposition in Member States
3.4. Developing financial security instruments
3.4.1.
D
ISCUSSIONS ENGAGED WITH INSURANCE AND THE BANKING SECTORS Most MS are engaged in discussions with the insurance and banking sectors during the preparation work for the ELD transposition into national law. Indeed, all the MS that responded to the questionnaire declared having discussed existing uncertainties, concerns, and needs with insurance NA and other stakeholders. Some of the discussed issues include the establishment of a mandatory financial security scheme, the exemptions, and the methods for estimating damages.In Austria (when national ELD transposition not finalised yet), discussions have been engaged with the Austrian Insurance Association which asked for information and data concerning the damage to protected species and natural habitats and required the transposition of the state of the permit exemption because current insurance products did not offer coverage in situations where the damage was the result of emissions or events explicitly authorised.
In Czech Republic, the Ministry discussed the possibility of launching a new insurance product to cover all liabilities under the ELD with the Czech insurance association. The conclusion of this discussion was that it was hardly possible to prepare such an insurance product:
36 European Commission, DG ENV
Financial Security in Environmental Liability Directive, Final Report August 2008 • The fact that part of the liability under ELD for damages to wild fauna, flora and
their habitats is not related to somebody’s health nor to somebody’s property was causing a problem for insurance principles.
• As insurance companies did not know the exact method used by public authorities to assess the costs of the damages a polluter could be obliged to pay in case of damage, they could not estimate possible costs for such measures.
• The Czech market is a relatively small market so the local insurance companies would need to be reinsured by larger international companies.
In France, the French ministry of Ecology, Energy, Sustainable Development and Spatial Planning met several times the FFSA (the French federation of insurance companies), Assurpol, insurance representatives, and MEDEF (Mouvement des Entreprises de
France). Besides, a public consultation was also organised in October 2006.
During the implementation phase of the German transposition of ELD, German competent authority was in contact with insurers, especially the GDV, and several meetings were held with some insurers engaged in R&D-projects. Uncertainties and needs of the insurers were discussed, which were also kept in mind during the transposition process.
In Hungary, several rounds of consultations were held between the Ministry of Environment and Water, Hungarian Bank Association, Hungarian Insurers' Association, and with individual market players. These consultations shaped the Hungarian legislation mainly regarding the type of instruments, type of cover, procedural issues, etc.
Ireland has consulted the insurance and banking sectors as part of the preparatory work to transpose the ELD (national ELD transposition not finalised yet).
In Slovakia, the Ministry of Environment organised some meetings with the insurance sector during the preparatory work for the transposition of the ELD, for example, about the establishment of mandatory financial security.
In Spain, both the insurance and the banking sectors have been involved in all public debates held during the legislation drafting process. Insurances companies have played a very active role during the discussion of the draft law on environmental liability. Their participation has been crucial and enabled the government to overcome difficulties both at the technical and economic level. Nevertheless, the banking sector showed poor engagement and almost did not contribute during the public debate of the draft law.
In United Kingdom, meetings have been held with both the insurance and re-insurance sectors and their responses have been taken into account in the transposition process.
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3.4.2.
M
EASURES TO ENCOURAGE MARKET DEVELOPMENTFor most MS, the main and most obvious factor encouraging market development is the transposition of the ELD as well as other pieces of national legislation introducing environmental liability. The approaches to encourage the development of financial security instruments and markets as requested by article 14 of the ELD do not differ much. In general, most MS have carried out information sessions and engaged different stakeholders in discussions about the implementation of the Directive in order to encourage the development of the environmental insurance market. The specific approaches are summarised below for some MS.
In Austria, a workshop titled "How to provide risk management and financial security in cases of environmental damages" was organised by the Austrian Standards Institute on the initiative of the Federal Ministry of Agriculture, Forestry, Environment and Water Management.
Belgium, Cyprus, Germany, Slovakia, Spain, and the United Kingdom, organised several information sessions and consultations with stakeholders.
In Spain, the Government sought the engagement of the insurance sector from the very beginning in the drafting process in order to raise awareness amongst the insurance companies. Furthermore, all demands coming from the insurance sector has been duly attended in order to overcome technical problems related to environmental risk assessment and to the proper restoration of the damages. Fruitful debates have allowed the government to get very useful inputs form insurers in order to tackle problems related to legal uncertainty, with respect to meet new needs in the field of risk assessment, and regarding the complexity of the relationship between the already existing insurance products and those to be put in place in the light of the new legislation.
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