Legal Regulation of Environmental Insurance

General Provisions

The legal regulation of environmental insurance aims at protecting the property interests of individuals and legal entities in the event of occurrence of ecological risks. This institution is based on general provisions on insurance, established in Chapter 48 of the Civil Code of the Russian Federation and the Law “On the Organization of Insurance Activities in the Russian Federation”, and is supplemented by norms of environmental legislation. Environmental insurance covers both liability for causing damage to the environment and property interests of those affected.

In scientific literature, two main forms of environmental insurance are distinguished: mandatory and voluntary. Mandatory insurance is established by law and includes governmental and non-governmental protective mechanisms. Voluntary insurance is carried out at the initiative of business entities based on a concluded contract and is aimed at insuring civil liability for environmental damage resulting from unintended ecological incidents.

The parties to the environmental insurance contract are the insurer and the insured. The insurer is a legal entity with the appropriate license, while the insured is an entity engaged in natural resource utilization or the owner of a source of increased environmental hazard. Mandatory insurance stipulates that the owner of a hazardous facility must insure liability for causing damage to the environment and third parties at their own expense throughout the entire period of operation of the facility.

Special attention is given to liability insurance on facilities posing increased ecological risks, including industrial and nuclear facilities. Legislation establishes requirements for financial guarantees of the liability limit of the operating organization, which may include a state guarantee, own funds, or an insurance policy. This ensures adequate protection against potential losses and damage to the environment in case of accidents.

The legal regulation of voluntary environmental insurance is based on the Typical Provisions, which define the insurance risk as the probability of third parties making property claims for damage to the environment. The object of insurance is the risk of civil liability for polluting land, water bodies, or the atmosphere. The occurrence of an insured event entails the insurer's obligation to pay insurance compensation to the policyholder, beneficiary, or affected party, which helps reduce the economic consequences of ecological incidents.

General provisions on insurance are provided for in Chapter 48 of the Civil Code of the Russian Federation (CC RF), as well as by the Law of the Russian Federation "On the Organization of Insurance Activities in the Russian Federation"¹. Current legislation does not contain a definition of the term "ecological insurance". However, this term is proposed to be defined in scientific literature. According to M.M. Brinchuk, ecological insurance refers to relations aimed at protecting the property interests of individuals and organizations in the event of environmental risks through the funds of special insurance reserves². According to B.V. Erofeev, ecological insurance is considered liability insurance for potential sources of danger to the environment, covering damage caused by them to physical and legal persons, as well as the environment itself as a result of the occurrence of an insurance event, which in our case is unintentional harm to the environment³.

The purpose of environmental insurance is to protect the property interests of legal and physical persons in case of environmental risks (paragraph 1 of Article 18 of the Federal Law "On Environmental Protection").

The parties to the environmental insurance contract are the insurer and the insured. As noted by A.L. Bazaykin, the insurer is a legal entity endowed with exclusive subjectivity, holding a license to conduct insurance of the relevant type. The insured is a subject of special environmental use, as well as a legally mandated owner of a source of heightened ecological danger⁴.

Environmental insurance may be carried out in the form of mandatory environmental insurance (which, in turn, is divided into state and non-state) and in the form of voluntary environmental insurance.

According to N.I. Khludeyeva, mandatory environmental insurance is implemented in cases explicitly established by law, while voluntary insurance is initiated by subjects of economic and other activities affecting the environment, based on a contract concluded between the insured and the insurer⁵.

In current legislation, provisions are provided according to which the owner of a hazardous facility is obliged at their own expense to insure property interests related to the obligation to compensate damage caused to victims by concluding a compulsory insurance contract with an insurer for the entire period of operation of the hazardous facility⁶. An organization operating a hazardous production facility is obliged to insure liability for causing harm to life, health or property of other persons and the environment in case of an accident at a hazardous production facility (Article 15 of the Federal Law «O») industrial safety of hazardous production facilities"). In order to make a decision on issuing a permit for putting a hazardous facility into operation, a document confirming the conclusion of a contract for compulsory insurance of the owner's civil liability for damage caused as a result of an accident at such a facility is required (paragraph 10 of part 3 of article 55 of the Construction Code of the Russian Federation⁷).

According to part 1 of Article 56 of the Federal Law "On the Use of Atomic Energy"⁸, the operating organization is obliged to have financial assurance of the liability limit for damages and harm caused by radiation effects, as established by Russian Federation legislation. In the event of compensation for damages and harm caused by radiation effects, the financial assurance of the operating organization consists of a state guarantee or another guarantee, availability of own financial resources, and an insurance policy (contract).

Voluntary environmental insurance is carried out in accordance with the Typical Regulation on the Procedure for Voluntary Environmental Insurance in the Russian Federation⁹. In accordance with the Typical Regulation, the insurance company (insurer) provides insurance protection to insured parties for civil (property) liability arising from damage caused to third parties as a result of sudden, unintentional and unexpected pollution of the surrounding natural environment within the territory of the Russian Federation. According to the aforementioned provision, the object of environmental insurance is recognized as the risk of civil liability expressed in

in the presentation of property claims by individuals or legal entities to the insurer in accordance with the norms of civil legislation on compensation for damage caused by pollution of land, water bodies, or air basin within the territory of application of a specific insurance contract¹⁰.

According to Article 9 of the Law of the Russian Federation «On the Organization of Insurance Activities in the Russian Federation», an insurance risk is recognized as a potential event, for which insurance is conducted in case of its occurrence. An insurance incident, on the other hand, is an actual event provided for by the insurance contract or law, the occurrence of which gives rise to the insurer's obligation to make an insurance payout to the insured party, the insured person, the beneficiary, or other third parties.