Environmental Claims Presentation

Transcription

1 Environmental Claims Presentation Rheged 27 th October 2010 David Waller, LLB (Hons) ACII, ACILA, Director, Environmental Claims Division, QuestGates, Chartered Loss Adjusters & Claims Specialists. 1

2 What is an Environmental Claim? An environmental claim in its widest context can emanate from any incident resulting in pollution or contamination to human health, buildings or other structures, land, the atmosphere or any water course or body of water 2 2

3 Where are the Gaps in Insurance Cover? Sudden identifiable incident Own land contamination Yorkshire Water v. Sun Alliance Statutory charges Bartoline v. RSA Preventative work duty to mitigate Overlapping policy cover Diminution of market value 3 3

4 4 Operative Clause would read:- In the event of accidental personal injury or loss of or damage to property or obstruction trespass nuisance or interference with any right of way, air, light or water or other easement which arises in connection with the business and which occurs during the period of insurance and within the territorial limits. Insurers will indemnify the policy holder against (1) legal liability for compensation up to the limit of indemnity and (2) costs and expenses. Usual exceptions will seek to exclude own land/property and pollution/contamination other than caused by a sudden identifiable unintended and unexpected incident which occurs in its entirety at a specific time and place during the period of insurance. 4 4

5 Typical Occupiers Liability Extension To Household Policy Your legal liability to pay damages and claimant s costs and expenses for: Accidental bodily injury or illness; or Accidental loss of or damage to property Happening during the period of insurance and arising: As occupier (not as owner) of the home and its land; Usual exclusions include damage to own land/property Loss damage or liability arising from pollution or contamination unless caused by: a) A sudden and unexpected accident which can be identified; or b) Oil leaking from a domestic oil installation at the home. 5 5

6 Legislation Brief history and development of environmental legislation in the UK 6 6

7 Legislation (continued) Land Environmental Protection Act 1990 Part IIA Contaminated Land Regime Land is defined as contaminated if significant harm is being caused or there is a significant possibility of such harm to be caused, or pollution of controlled waters is likely to be caused. A significant pollution linkage (SPL) must be identified The regime identifies two type of people which may be liable under the principle the polluter pays. Class A - Those who have caused or knowingly permitted the presence of contaminants Class B - The owner or the occupier of the land 7 7

8 Legislation (continued) Controlled Water Water Resource Act (1991) Part III Chapter 1 Section 85 A person who causes or knowingly permits any poisonous or polluting matter or any solid waste to enter any controlled waters. Section 161 Authority shall be entitled to carry out antipollution work and operations if: Pollution is likely to enter controlled waters If contamination has entered controlled waters to restore as reasonably practicable the flora and fauna dependent on the aquatic environment prior to the pollution incident. 8 8

9 Legislation (continued) Water Environment & Water Services (Scotland) Act 2003 Provides statutory framework for protection, improvement and sustainable use of surface waters, transitional waters, coastal waters and groundwater Requires any activity that is liable to cause water pollution to be authorised. Water Environment (Controlled Activities) (Scotland) Regulations 2005 Creates offence of discharging polluting matters without authorisation. 9 9

10 The Environmental Damage (Prevention and Remediation) Regulations This is the transposition of the Environmental Liability Directive (ELD) into UK law (1 st March 2009) Liable persons Operator of occupational activity carried out under EC legislation listed in Directive is strictly liable for preventive or remedial measures due to imminent threat of, or actual, environmental damage to natural resources, that is: Water Land Protected species and natural habitats 10 10

11 The Environmental Damage (Prevention and Remediation) Regulations (continued) Liable Persons Operator of occupational activity not carried out under listed EC legislation is liable for preventive or remedial measures due to imminent threat of or damage to: Protected species and natural habitats Provided that operator is negligent or otherwise at fault 11 11

12 The Environmental Damage (Prevention and Remediation) Regulations (continued) Environmental damage threshold Land: significant risk of adverse effect on human health Water: significant adverse effect on ecological chemical or quantitative status and ecological potential of waters Protected species and natural habitats: significant adverse effect on attainment or maintenance of conservation status 12 12

13 The Environmental Damage (Prevention and Remediation) Regulations (continued) Remediation Land Removal of significant risk of adverse effect on human health Water and protected species and natural habitats: Primary remediation Complementary remediation Compensatory remediation 13 13

14 The Environmental Damage (Prevention and Remediation) Regulations (continued) Exceptions (armed conflict, natural phenomenon, activities serving national defence or international security, protection from national disasters) Mandatory defences (caused by third party despite appropriate safety measures, result of compliance with governmental authority s unrelated compulsory order or instruction Optional defences (emission or event in compliance with permit issued under domestic law which has transposed EC legislation or activity or emission not likely to cause damage according to current scientific and technical knowledge

15 The Environmental Damage (Prevention and Remediation) Regulations (continued) Type of damage Liability for operators of Annex iii occupational activities Liability of operators of other occupational activities Standard of remediation Type of remediation applicable To protected species and natural habitats Strict Fault based Return the environment as a whole back to baseline condition, and remove any significant risk of an adverse effect on human health Primary Complementary Compensatory To water Strict None Return the environment as a whole back to baseline condition, and remove any significant risk of an adverse effect on human health Primary Complementary Compensatory To land Strict None The removal of any significant risk of an adverse effect on human health Remove significant risk of adverse effects on Human health, taking account of actual or planned future use 15 15

16 The Environmental Damage (Prevention and Remediation) Regulations (continued) Suggested could have only modest impact in reality Baseline levels/target values - potential difficulty to determine baseline condition pre incident Preventative action i.e. regulator can impose corrective action for potential damage - quantification therefore difficult Improvement works regulators may insist upon this, query policy coverage 16 16

17 The Environmental Damage (Prevention and Remediation) Regulations 2009 (continued) Remediation, primary, complimentary and compensatory Reserving issues Potential choice of legislation available to regulators Possible bean feast for the consultants! 17 17

18 EDR in Action Mid Devon District Council case Modest spill of kerosene at residential location from road tanker Health threat to household EDR more practicable tool to enforce clean up than Part IIA EPA 1990 or WRA 1991 Spill resulted from economic activity, dangerous substance entered ground, health risk, none of exemptions applied. Why EDR? adverse effects on human health easier to satisfy than significant risk of significant hard

19 Hungarian Sludge & ELD Alumina plant reservoir dam failure at Ajka, Hungary, Highly alkaline sludge, ph villages destroyed, 5 dead, controlled water including the Danube under threat. Natural attenuation chemical neutralisation/buffering in soils and surface water and dilution. Response includes adding clay and acids to rivers to neutralise. Human health mainly ingestion risk and dust inhalation

20 Hungarian Sludge - Remediation Source removal as practicable Treatment of oils and water with neutralising agents Soil washing and recovery (acids etc; metals recovery. Natural attenuation chemical neutralisation/buffering in soils and surface water and dilution. Response includes adding clay and acids to rivers to neutralise. Human health mainly ingestion risk and dust inhalation

21 Hungarian Sludge - ELD More pressure on EU Governments to force industries to insure or make financial provision against such serious enviro incident. Hungary had intended to enforce compulsory financial provision. Current position MAL Magyor Aluminium has offered to pay villages 360 per family, up to max of 110,000 Company s 3 private owners have individual fortunes of between 60,000,000 and 85,000,000! 21 21

22 Insurance Solutions? Environmental Impairment Liability insurance. Increasingly available, at more competitive rates e.g. specialist cover offered by endorsement to NFU Mutual policyholders. Cover not subject to sudden identifiable restrictions, covers own land clean up and statutory as well as civil liabilities. Regulator Enforced remediation including habitat damage (primary, complementary and compensatory)

23 Case Study 1 23 Location Domestic property Nr Winchester. Pollutant Approximately 5000 litres of kerosene Groundwater vulnerability Total catchment area. Very close to a grade A river and SSSI. Geology Topsoil overlying approximately 1.5 m of gravel followed by chalk at depth. Hydrogeology presence of shallow (<1m) groundwater

24 Site Location 24 24

25 Contamination Assessment Kerosene mostly contained as free product on top of shallow groundwater. Lateral movement of free and dissolved phase. Constraints: Kerosene impacted nearby listed (grade II) building with no foundations. High soil permeability requires extremely high pumping rates in order to achieve hydrogeological containment. No discharge possible except to surface water. Necessity to minimise on site disruption. 25 Remediation system of trenches excavated. In situ treatment of groundwater over 18 months, then 6 months monitoring

26 Traditional Approach Excavation of approximately 5000 m3 of material Contaminated soil disposal approx. 300K Backfill operations approx 100K Garden reinstatement approx 35K Total - 435K 26 26

27 Innovative Treatment Solution Installation of an innovative in situ recovery system System cost including installation 190K Operating cost 40K Post monitoring cost 15K Total 245K 27 27