Eight weeks to go for EU directive, but many questions still unresolved

Talk about confusion. Even the Government doesn’t know when the environmental liability directive is set to come into force.

So you can imagine how hard it is for brokers and insurers alike to know its start date. Most believe we have only eight weeks to wait.

But one thing is clear, companies that think they need environmental liability cover, should start preparing now.

The directive could have serious consequences for those companies that breach the rules. In the past, if a factory say for example, caused damage to the environment by flushing toxins into a river, that company would have to restore the damaged area. A costly business one might think.

Those costs could rocket as the directive says not only will firms have to amend the original damage, but make amends by fixing up another area – even though the firm may not be responsible for that environment.

It could be anything from planting new fauna and integrating a new species of dragon fly into the environment, to fixing up the drainage system of a river. Costs could run into the hundreds of thousands, even millions. And it almost certainly won’t be covered under public liability.

So why isn’t there a rush to take out new cover?

There are two problems. One is that firms are simply are unaware. After all, this directive has been dragging its feet for a few years now amid a cloud of confusion.

Secondly, as Tony Lennon, Chubb’s environmental solutions director, says, many companies may feel it’s just another product being sold to them, although he argues strongly that is certainly not the case.

It is quite conceivable that businesses – mostly factories and manufacturers – may have never had a record of environmental damage and may not see the point of the cover.

By this time next year a lot more will be clear, as the costs involved and the number of breaches over 12 months will be known. You can be sure the Insurance Times will be watching events closely.