Environmental insurance: world experience and prospects in Ukraine
Olena Kryvoruchkina, People's Deputy of Ukraine of the IX convocation
In 2010, 800 million liters of oil spilled into the Gulf of Mexico due to the explosion of the Deepwater Horizon floating drilling platform. Payments for third-party claims, accident cleanup, and fines amounted to $54 billion, most of which was compensated by the insurer. This is far from the only insurance case in the field of environmental insurance, which has recently become extremely relevant on a global scale. This is due to its exceptional importance in preventing and compensating environmental damage, as well as the positive results of foreign countries that have experience in this area. Such insurance allows all victims of environmental pollution to receive financial compensation. And mandatory environmental insurance not only guarantees compensation for damages but also acts as an incentive to prevent accidental environmental pollution.
USA
Against the background of the formation and development of environmental law in the 50s and 60s of the XX century, the USA became one of the first countries in the world to introduce an effective mechanism for insuring liability for environmental degradation (environmental impairment liability insurance). Until the 80s, environmental risks in the USA were included in general liability insurance policies, but the increasing probability of their occurrence and stricter requirements for environmental safety of business entities affected the practice of their separate insurance. It was during this period that environmental insurance became an urgent need for most investors and contractors, as the development of new territories, mineral deposits, and the activities of oil and gas, chemical, and other companies became impossible without appropriate policies.
The paradox of the situation was that with the growing demand for environmental insurance policies, these services became largely inaccessible at the end of the XX century, both in terms of price and insurance conditions. This was due to increased environmental liability standards, precedents in judicial practice, and, as a result, increased risk for insurance companies. The solution to these problems in practice was implemented by creating favorable conditions for the development of environmental insurance, developing special programs (insurance of underground oil product storage facilities, etc.), and offering new insurance services (for example, for projects related to old industrial areas "brownfields").
Despite the significant experience of the USA in the field of environmental insurance, which is of interest to scientists and practitioners worldwide, it should be noted that financial compensation there is aimed exclusively at compensating for environmental damage. Compensation for damage caused to the life, health, and property of individuals and legal entities remains outside the context.
EU COUNTRIES
Despite the fact that the institute of environmental insurance in the EU began to develop simultaneously with the USA, most experts characterize it as quite "young". Compensation costs for environmental restoration in EU countries are currently covered by environmental insurance contracts, and not by civil liability insurance contracts, which are more common for Europeans. The implementation of such a mechanism was initiated in accordance with EU Directive 2004/35/EC "On environmental liability with regard to the prevention and remediation of environmental damage", in accordance with which the national environmental legislation of EU countries was brought into compliance before 2010. By the way, this Directive does not provide for compensation for damage to individuals and legal entities, the compensation of which is traditionally carried out on the basis of civil liability contracts.
Germany's experience is interesting, where, despite the absence of special legislative acts on environmental insurance, a consistent policy of environmental damage compensation is implemented. Their value is based on subjective assessments of the plaintiffs, and the adequacy of the assessment judgments is determined by court decisions. It is the principled nature of the latter that stimulates the development of voluntary environmental insurance. Mandatory insurance contracts are provided exclusively for enterprises with a high level of environmental pollution risk in accordance with the current Law "On criminal liability for environmental damage".
The targeted nature of environmental insurance in France is primarily focused on preventing negative environmental impacts in order to reduce potential damage from an insured event. To a large extent, this approach is due to the environmental awareness of both the population and economic entities. The Law "On preventive measures against technological and natural risks and damage compensation" allows victims of man-made disasters to apply for damage compensation to insurance companies, and not directly to the persons responsible for the damage. In addition, France was one of the first countries to use reinsurance pools for damage compensation. Following the practice of France, in Finland, to compensate for full compensation for environmental damage, a corresponding compensation fund has been created, which is financed by commercial insurance companies based on insurance premiums from mandatory environmental insurance.
CIS COUNTRIES
Provisions on environmental insurance are contained in the legislation of all post-Soviet countries. In addition, the vast majority of them have relevant specialized legislative acts. The difference lies in the nature of eco-insurance: either voluntary, or mandatory, or mixed. Thus, in the Russian Federation, there is still no system of mandatory insurance of environmental risks, and no information database of man-made accidents and disasters has been formed. In contrast, legislative acts on mandatory environmental insurance are effectively working in the Republic of Azerbaijan (since 2002), the Kyrgyz Republic (since 1999), and Turkmenistan (since 2013).
The experience of the Republic of Kazakhstan is indicative from the point of view of the development of the legal framework for environmental insurance. It was implemented in three stages. The first stage, typical for most post-Soviet countries, was characterized by the initiation of an environmental insurance mechanism in accordance with the Law "On Environmental Protection" in 1997. At the second stage, in 2005, a special Law "On Compulsory Environmental Insurance" was adopted, according to which all legal entities and individuals, regardless of organizational and legal form and form of ownership, whose activities are dangerous from the point of view of environmental impact, are subject to insurance. At the third stage, which began in 2007 with the adoption of the Environmental Code of the Republic of Kazakhstan, the financial responsibility was expanded from exclusively compensation for damage caused to the environment to compensation for damage caused to the health and property of third parties as a result of accidental pollution.
UKRAINE
There is no separate Law on environmental insurance in Ukraine, but references to this concept and the possible mechanism of its operation are contained in the Laws of Ukraine "On Environmental Protection", "On Insurance", etc. It is worth noting that as early as 2015, a draft law "On compulsory insurance of liability of business entities whose activities pose an increased environmental hazard" was developed, but it never became a law.
The growth of environmental and man-made risks in Ukraine objectively requires the development of a legislative basis for liability insurance for damage caused to the environment, human life and health.
On February 10, 2021, a working group "On preventing and compensating environmental damage" was established on the basis of the Committee of the Verkhovna Rada of Ukraine on Environmental Policy and Nature Management: https://cutt.ly/zvsL5vQ
Given the intersectoral nature of the issue, the working group includes diverse representatives of state authorities, non-governmental organizations, and international partners of the Eco-Committee. The primary tasks of the working group are: substantiation of effective mechanisms for preventing the consequences of environmental damage; establishing requirements for the types and forms of financial guarantees for their elimination; developing key provisions for regulating legal relations related to environmental insurance.
By the decision of the National Security and Defense Council of Ukraine dated March 23, 2021 "On challenges and threats to national security of Ukraine in the environmental sphere and priority measures to neutralize them", enacted by the Decree of the President of Ukraine dated March 23, 2021 No. 111/2021, among the priority tasks in the environmental sphere is the development and submission to the Verkhovna Rada of Ukraine within three months of a draft law on environmental insurance.