Dominic Thomas explains why the demand for environmental insurance is on the increase
On 30 April 2007, the government is committed to implementing Directive 2004/35/EC on environmental liability with regard to the prevention and remedying of environmental damage. The Directive is based upon the ‘polluter pays’ principle, whereby polluters bear the cost of remediating the damage they cause to the environment, or the cost of measures to prevent imminent threat of damage. Crucially, the proposed Directive does not cover economic losses resulting from the damage, such as personal injury or property damage.
Controversial consultation
The Directive has been controversial from the outset. Its original wording obliged the European Commission (the Commission) to submit proposals for a harmonised compulsory financial guarantee for water and soil damage. However, concerns over cost implications meant that the requirement was dropped, but the issue is to be revisited in 2010 and is likely to be introduced eventually.
Even without compulsory guarantees, the consultation process for the Directive proved divisive. The green lobby, for instance, was critical that the proposed Directive did not cover economic damage and that polluters would have
