LONDON, 15 December 2006 – Leading insurance and reinsurance broker and risk management consultant Aon Limited is urging UK businesses to take part in the Department for Environment, Food & Rural Affairs (DEFRA) consultation on the EC Environmental Liability Directive (ELD).

The ELD is due to be enacted into the laws of the Member States on 30 April 2007. According to Bob Martin, a director in Aon’s Environmental & Consulting Solutions division, while DEFRA anticipates the major impact will be on SMEs, it is widely accepted that the added profile this will bring to environmental risk management will have a knock on effect on all businesses in the UK. Thus they are to be encouraged to engage in the current consultation and to take part in the wide ranging consultation that DEFRA has indicated it would like to see take place, he says.

The first of the planned two consultations on options for implementing the ELD into the law of England, Wales and Northern Ireland has just been published by DEFRA (similar consultation is taking place in parallel for Scotland). DEFRA has indicated that it will be visiting 17 centres throughout England, Wales and Northern Ireland in early 2007 to help the consultation process.

The current round of consultation was planned to have taken place in summer 2006, so there is obvious slippage. Due to the complexity of the challenge this is not surprising, says Mr Martin. But the slippage could result in the period available for consultation being squeezed. Hence, he says, it is most important that anyone who may be affected takes the time to download the consultation papers and input their own responses. "Do not procrastinate," he urges.

Responses can be submitted by individual entities or through trade associations and professional bodies, such as AIRMIC. The deadline for comments is 16 February 2007. "With the intervening statutory holidays this is not as long a period as it first appears," comments Mr Martin.

"The second round of consultation was scheduled for winter 2006/2007 but will now slip into the new year, if it takes place at all, which places a greater emphasis on the need to respond to the current proposals," he adds.

Whilst the requirement for mandatory insurance that existed in earlier drafts of the ELD did not make it through to the final draft, Article 14(2) clearly leaves the door ajar for this to be implemented if the necessary developments do not take place before 30 April 2010. This is the date Member States are required to report back to the EC on the effectiveness of the Directive in terms of actual remediation (clean up) of environmental damages, on the availability at reasonable costs and on conditions of insurance and other types of financial security for the activities defined in the annex to the Directive.

"It is important that the correct dialogue takes place on these proposals at this time to avoid potential unpleasant surprises in the near future. That means everyone concerned must respond to the consultation proposal and/or advise others of their need to do so," concludes Mr Martin.

Mr Martin also commented, "The judgment handed down in the recent case of Bartoline Limited v Royal & SunAlliance Insurance plc, in regard to remediation costs not being covered by the relevant public liability policy, should increase the interest in taking part in this consultation. This, coupled with liability for damage to protected species and natural habits to be imposed by the enactment of the Directive, should now cause entities to seriously consider placing more specific environmental impairment liability insurance in the future."

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About Aon

Aon Corporation is a leading provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. There are 46,000 employees working in Aon's 500 offices in more than 120 countries. Backed by broad resources, industry knowledge and technical expertise, Aon professionals help a wide range of clients develop effective risk management and workforce productivity solutions.

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