environmental risk the threat to your balance sheet

©2013 XL Group plc companies except third party materials as indicated. All rights reserved

ENVIRONMENTAL RISK THE THREAT TO YOUR BALANCE SHEET

18th September 2013

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©2013 XL Group plc companies except third party materials as indicated. All rights reserved 2

Environmental Exposures

Environmental Risk - Hazard & Sensitivity



Even “Green Projects”? (1)



Even “Green Projects”? (2)


“I don’t need environmental insurance – I’m already covered...”

Key gaps in coverage between a public liability and an environmental policy


Gaps in coveragePublic Liability vs. Environmental Impairment Liability(General position and not absolute)

PL Policy EIL Policy

- Regulatory Claims? No Yes

- First Party Clean up? No Yes

- Gradual Releases? No Yes

- Env. Liability Directive? No Yes

Insurers and reinsurers are increasingly drawing a line between what is covered under a PL policy for environmental claims


Gaps in coverageRegulatory Costs & First Party Cleanup Costs

Fire Water (1)



Fire Water (2)



Bartoline Ltd v (1) Royal & Sun Alliance Insurance Plc (2) Heath Lambert Ltd [2006]

Bartoline tank farm post fire Cleanup Operation


Bartoline

“But I have a ‘Bartoline’ extension...!” (1)

Typical example:

The indemnity provided by this Policy in respect of any claim or claims for Bodily Injury or damage to Property caused by or contributed to by or arising out of the discharge dispersal release or escape of Pollutants into or upon land the atmosphere or any watercourse or body of water shall include Clean Up...

…the Insurer will not indemnify the Insured in respect of Clean Up of any site or land owned occupied leased or rented by or under the control of the Insured...

Clean Up shall mean the cost of Remediation necessarily incurred by the Insured (or for which the Insured is legally liable to pay as required by any Enforcing Authority...


Bartoline

“But I have a ‘Bartoline’ extension...!” (2)

Typical example cont.....

Remediation shall mean the investigation monitoring assessment mitigation curtailment or minimisation of any discharge dispersal release or escape of Pollutants into or upon the land the atmosphere any water course or body of water which has caused significant harm or which poses a significant risk of causing further significant harm to Property not owned occupied leased or rented by or under the control of the Insured or Bodily Injury to any person but only to the extent that the Insured is required to take such action by an Enforcing Authority

The indemnity provided will not apply to any liability for Clean Up costs in relation to the reinstatement or reintroduction of flora or fauna.The indemnity provided will not apply to any liability arising from Directive 2004/35/CE of the European Parliament and of the Council of 21 April 2004 on environmental liability with regard to the prevention and remedying of environmental damage…

...exclusion of seepage pollution or contamination other than where such seepage pollution or contamination is caused by a sudden unintended and unexpected happening during the Period of this Insurance...


‘Bartoline’ extension

“I have a Bartoline extension – so I’m covered?”

• Still needs a tort liability to trigger policy• Doesn’t cover on-site clean up• Doesn’t cover gradual pollution incidents• Doesn’t cover Environmental Liability Directive risks• Requires legal liability to attach (UK environmental law works on preventative &

voluntary principles)• Doesn’t permit admission of liability (ELD requires notification)• Doesn't cover emergency costs / preventative measures

• So what does it cover? – off-site sudden and accidental, where there is a third party claim and then a requirement to remediate to a regulatory standard


College / educational establishments – low risk!?!

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This is an example from the library of images.



Slurry store collapse:


•The Environment Agency reports 2 significant pollution incidents a day in the UK

•>40% of incidents result from equipment or control failures

•>10% result from fire

•So even sites with sophisticated risk management systems and infrastructure in place can have incidents

“ but it won’t happen to me…”


THANK YOU FOR YOUR TIME

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Philip HoggEnvironmental UnderwriterXL Insurance Company PlcTel: +44 (0) 207 933 [email protected]

Shane HerlihyManaging DirectorEnvironmental Risk Solutions Ltd.T +353 (0)87 233 4252E [email protected]

Graham Hawkins Head of Environmental Solutions Cunningham Lindsey DDI: +44 (0)1924 428648Email: [email protected]

In conjunction with:

mailto:[email protected]



environmental risk the threat to your balance sheet

Documents

lt greenr

party materials

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rights reservedyellowr

green projects

environmental insurance

coveragepublic liability

key gaps