The insurance industry has blasted the government for dragging its feet on the implementation of the Environmental Liability Directive (ELD).

The Directive will extend companies’ liability for environmental damage.

Despite provisions being laid out, it is not expected to be written into the statute book until April next year. The Directive was expected to be implemented on 30 April 2007.

A spokesperson for Biba commented: “We are in limbo. Additional liabilities are out there. Until this is made into statute, that is where we will remain.”

Environmental risks could represent the largest potential liability for all companies, not solely SMEs – of which up to a million could be at risk.

“It’s time to wake up,” added Bob Martin, director of Aon’s environmental consulting and solutions unit.

“The government has had three years to act on this. It hasn’t been given the profile it deserves.”

Parliamentary meetings are being held to assess Defra’s handling of the situation.

Although a typical public liability policy has some provision for accidental pollution, the wording is open to interpretation both by insurers and, more importantly, the courts.

The situation is compounded by the fact that in many cases brokers lack the knowledge to deal with the problem.

“Few insurers have environmental specialists,” said Martin. “The chances that a regional broker understands environmental insurance liability cover – let alone the implications of the ELD – are remote.”

Biba has attempted to plug the gap by developing a scheme for brokers to develop expertise and use it in an advisory capacity. It will be rolled out in the next couple of months.