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Environmental Liability

Directive (ELD)

that equal treatment of intermediaries on the respective petent authorities should assess any distribution model Background One of the issues that has come up over the years in the discussion at European
market is guaranteed. 30. When assessing whether a against the definition of distribution activity as provided level is the availability (at reasonable costs) of insurance and other types of financial
specific UK intermediary or entity is providing distribu- for in the IDD”. security, and the need or not for mandatory financial security.
tion activities in the EU, competent authorities should The Environmental Liability
take into account that only the consistent and uniform On 31 October 2019 EIOPA published on its website Directive (ELD) was adopted The implementation checks of the Directive found that lack of data on ELD cases
application of the IDD can guarantee the same level of responses from NCAs on whether they comply with each and on comparable incidents/accidents treated under national legislation, were the
protection for consumers and ensure a level playing of EIOPA’s recommendations (or explain the reasons for in 2004 and last amended in cause of the Directive’s limited effect in preventing and remedying environmental
field in the Union. Competent authorities should ensure not complying with those recommendations). 2013. The overall objective of damage.
that all intermediaries carrying out distribution activi- the ELD is to apply common,
ties which target EU27 policyholders and EU27 risks fall According to the information published, all NCAs comply legally binding EU standards In February 2017, the European Commission published a Multi-Annual ELD Work
under the scope of the IDD. 31. For this purpose, com- or intend to comply with almost all recommendations. Programme “Making the ELD more fit for purpose” for 2017-2020. This Work Pro-
designed to reduce damage
gramme consists of three main pillars:
to natural resources. It sets
out an environmental liability 1. Improving the evidence base for evaluation and decision-making for the Com-
mission, Member States, stakeholders and practitioners (assessment frame-
framework to prevent and
work and ELD registry),
remedy environmental 2. Supporting the implementation through tools and measures for more even

damage to pre-damage implementation (common understanding of terms and concepts, capacity build-
ing and training),
condition when it is caused
3. Ensuring sufficient availability of financial security, in particular for large losses
by economic operators.
or in case of insolvency (secure, sufficient and available instruments to cover
ELD liabilities).

In the framework of the work programme the Commission requested law firm Ste-
vens & Bolton to do a study (“Financial Security Study 2019”) and publish a report to
fill the gap in knowledge for the Commission on voluntary and mandatory financial
security for ELD liabilities, and to suggest ways in which such financial security could
be improved both at an EU level and a Member State level.

In March 2019, BIPAR attended a European Commission stakeholder meeting and
in summer and autumn 2019, BIPAR and its working party on environmental liability
provided feedback for the draft study through questionnaires on the presence and
functioning of environmental insurance policies at national level.

On 4 June 2020, the European Commission and the law firm published the final
report on improving financial security in the context of the ELD.
The report states that it is premature to recommend harmonised mandatory finan-
cial security for ELD liabilities or an EU-wide fund.
The report however adds that effective implementation of the ELD cannot occur in
the absence of insurance for liabilities under it.
Therefore, it recommends measures to increase availability and demand for ELD
liabilities insurance, referring to an EU-wide training programme. The report refers
to BIPAR and its members in this respect (as well as other European trade associa-
tions), to provide advice into such a training programme.

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