UK firms unprepared for new liability legislation

Europe

Chubb Insurance Company of Europe ( Chubb Europe) warns that commercial companies in the UK are largely unprepared for the European Union’s Environmental Liability Directive (ELD) which becomes law in the UK on April 30, 2007. Chubb says that most UK companies have very limited understanding of their present environmental liabilities let alone the increased ones they will face once the ELD becomes law. Tony Lennon, European Manager of Environmental Solutions at Chubb Europe, is particularly concerned about DEFRA’s decision not to introduce compulsory risk assessments for companies as it would logical, for example, under the rules on contaminated land. Mr Lennon warns that the directive will be implemented in UK as a reactive law rather than one that promotes risk awareness and understanding. “DEFRA have argued that they are protecting industry by not introducing compulsory risk assessments. However, industry needs to be informed of their potential areas of liability and the scale of the bill they could face if environmental damage occurs,” Mr Lennon says. The Directive reinforces the ‘polluter pays’ principle and is intended to act as a strong incentive for operators to avoid causing environmental damage. The Directive includes new and unprecedented remediation requirements and financial liabilities if an operator causes environmental damage to protected habitats and species. Although it looks increasingly likely that the UK will miss this deadline and the UK government could face legal action from the EC for failing to implement the legislation in time, Chubb also warns that any delay in implementation does not necessarily remove the liabilities on individual companies should they cause damage to the environment.