Insure against contamination

by James Atkinson



A leading insurance firm has warned against the hysteria being generated by the new Contaminated Land Regime, which holds landowners liable for contamination on their sites, whether they were responsible for it or not.

The new law, which came into force on 1 April, represents Part IIA of the Environmental Protection Act 1990. It introduces the concept of retrospective liability for contamination.

The law is likely to hold up or even prevent the redevelopment of brownfield sites, as developers are extremely nervous at having to take on liability for any damage or accidents caused by contamination at a later date. The Government's goal of building 60% of new homes needed by 2016 on brownfield sites could also be hard hit by the new law.

However, insurance firm Certa, which acts as an underwriting agent for Allianz Cornhill International, said that there are risk and insurance solutions available in relation to contaminated land and environmental liability.

Certa tailors individual insurance cover for clients from a legal, technical, insurance, actuarial and financial perspective. Company experts examine each case on its merits and design an insurance policy to suit that covers both the seller and buyer of the land.

The company has been in the business for two and a half years and said it has already completed analysis on more than 1,000 environmental reports and helped businesses with more than 5,000ha of contaminated land.

Approximately 20,000 sites are to be regulated under Part IIA, but estimates of contaminated land in the UK are put at 75,000 sites, totalling about 90,000ha. Definition of what exactly constitutes a contaminated site has not yet been agreed. Government statistics in 1989 put the figure at between 10,000 and 27,000ha of contaminated land, while the CBI puts the figure at 100,000ha with a £20bn cost of remeditation. Some £600m a year is being spent on contaminated land clean-up, according to Certa.