Compulsory insurance of environmental risks
The activity of many industrial enterprises can cause irreparable damage to the environment, disturb the ecological situation and cause serious harm to people's health. Citizens' rights to a favourable natural environment are enshrined in the Civil Code of the Republic of Kazakhstan, and violating them entails liability to the state and to the injured parties.
Environmental insurance will protect your enterprise, which carries out environmentally hazardous activities, in the event of harm caused to the life, health, property of third parties and (or) the environment as a result of its accidental pollution.
An insured event is an accident at the facility that has caused harm to the life, health, property of third parties and (or) the environment.
The insurance payment is made in the amount of the actual damage caused to the life, health, property of third parties and (or) the environment as a result of its accidental pollution. For harm caused to the life, health and (or) property of the victim, the insurance payment is made regardless of amounts due under social security or other insurance contracts.
The sum insured (the limit of the insurer's liability under the contract) is set by agreement of the parties, but must be not less than:
- for individuals who are individual entrepreneurs — from 5,000 MCI;
- for legal entities — from 65,000 MCI;
- if the insurance contract is concluded only for insurance of liability for causing harm to the environment — from 17,000 MCI.
The insurance rate (calculated from the sum insured under the contract):
- for individual entrepreneurs and legal entities — from 0.76% to 2.65%;
- if the insurance contract is concluded only for insurance of liability for causing harm to the environment — from 0.59% to 2.05%.
Who needs environmental insurance
The obligation to conclude a contract arises for individual entrepreneurs and legal entities that carry out environmentally hazardous types of business and other activity. The list of such types of activity is approved by the authorized body in the field of environmental protection. As a rule, these are industrial production, extraction and processing of minerals, energy, the chemical industry, storage and transportation of hazardous substances, and handling of hazardous waste. If you are not sure whether your activity falls within this list, it is worth checking before the facility starts operating.
What the contract covers
- Harm to the life and health of citizens injured by accidental pollution.
- Damage to the property of third parties — residential buildings, crops, the equipment of neighbouring enterprises.
- Harm to the environment — soil, water bodies, atmospheric air — assessed in the established manner.
What is not an insured event
The contract protects specifically against the consequences of an accident. Emissions and discharges within established standards, as well as gradual pollution not connected with an accident, are as a rule not recognized as insured events. The consequences of the policyholder's intentional acts are also not covered. The exact list of exclusions is determined by the law and the contract.
What the rate depends on
The law sets a corridor of rates, and the insurer determines the specific value within it from the characteristics of the facility:
- the type of activity and the hazard class of the production;
- the nature and volume of the hazardous substances used or stored at the facility;
- the technical condition of equipment and structures;
- the presence of systems for preventing and containing accidents;
- the history of accidents and incidents;
- the location of the facility relative to settlements, water bodies and agricultural land.
How to choose the sum insured
The statutory minimum is a lower bound. If the facility is located near residential development or water bodies and a possible accident could affect a large area, it is sensible to increase the limit: harm in excess of the sum insured will have to be compensated from the enterprise's own funds.
Relationship with hazardous facilities insurance
Environmental insurance does not replace compulsory liability insurance of owners of hazardous facilities, which covers harm to third parties in an accident at a hazardous production facility. Many enterprises need both contracts; you can estimate the second in the hazardous facilities insurance calculator.
What to do in an accident
- Take measures to contain the accident and reduce the damage.
- Report the accident to the authorized bodies and the insurance company within the deadlines established by the contract.
- Give the insurer's representatives access to the facility and preserve data on the causes and scale of the pollution.
- Collect the accident investigation report, environmental monitoring data and documents on the harm claimed by the victims.
- Agree the settlement of third-party claims with the insurer.
Common mistakes
- The contract was not concluded before environmentally hazardous activity began.
- The sum insured was calculated using an outdated MCI value.
- Incomplete information about the facility in the application, which leads to disputes at the time of payment.
- Late notification of the insurer about an accident.
Frequently asked questions
Is it possible to insure only harm to the environment?
Yes, the law allows a contract only for liability for harm to the environment — separate minimum sums and rates, stated above, are set for it.
Are these requirements in force now?
Kazakhstan's environmental legislation has been updated, including with the adoption of the new Environmental Code, so the insurance parameters should be checked against the current version at adilet.zan.kz.
You can calculate the approximate cost in the environmental insurance calculator. To choose a limit and compare insurers' terms, you can get a consultation from a broker.
Compulsory insurance of environmental risks is carried out in accordance with the Civil Code of the Republic of Kazakhstan and on the basis of the Law of the Republic of Kazakhstan "On Compulsory Environmental Insurance" dated 13.12.2005 No. 93-III.