FERMA is opposing a proposal from the European Economic and Social Committee to create a fund to cover environmental liability losses from industrial accidents.

Florence Bindelle

FERMA executive manager Florence Bindelle made a short presentation of FERMA’s views at an important workshop in Brussels on 7 November to discuss the proposal, which has come from the Hungarian government as a result a spill of toxic red sludge from an industrial plant in October 2010.

She told the gathering that FERMA believes that there is sufficient insurance coverage available for sudden and accidental and gradual environmental pollution. FERMA also disagrees with making any coverage mandatory either through a fund, pool or any other insurance scheme.

Pierre Sonigo

FERMA general secretary Pierre Sonigo, who is responsible for FERMA’s environmental liability activities, says there are several reasons why a fund is not needed and could even increase the risk of pollution.

“It is contrary to the polluter pays principle established in the Environmental Liability Directive,” he stated. “It is even likely to work against the process of risk management, rather than encouraging companies to take responsibility for the consequences of their own activities.”

He added: “In most of western European, there is good insurance coverage for environmental pollution risks. Where the market is not so sophisticated or business finds the price unacceptable, it is not right that other countries should pay to mutualise a risk which should be managed locally.”

Pierre added that the existence of a compensation fund would complicate the settlement of losses because it would not be coordinated with insurance programmes, and that the limits and deductibles were unlikely to be adequate for large businesses.

FERMA members will eventually receive a questionnaire prepared by BIO Intelligence Service on behalf of the European Economic and Social Committee to request their views of the insurance market for environmental liability risks and possible fund.