Environmental insurance

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Below is a brief analysis of the law on compulsory environmental insurance: why it was adopted, whom it affects, what obligations arise for the parties and what is important to take into account in practice. The file for download was published a long time ago, and Kazakhstan's environmental legislation has since been substantially updated, so before applying it be sure to check the current provisions at adilet.zan.kz.

Purpose of the law

The Law of the Republic of Kazakhstan "On Compulsory Environmental Insurance" regulates relations in the field of liability insurance for persons whose activity may lead to accidental environmental pollution. Its task is to ensure that harm caused to the life, health and property of third parties, as well as to the environment, is compensated from insurance payments, and not only from the own funds of the enterprise that caused the accident. In this way the law protects injured citizens and the state and at the same time reduces the financial risk for the resource users themselves.

Who the law affects

The obligation to insure is placed on individuals who are individual entrepreneurs and on legal entities that carry out environmentally hazardous types of business and other activity. The list of such types of activity is determined by the authorized body in the field of environmental protection. Most often these are industrial production, extraction and processing of minerals, energy, and the handling of hazardous substances and waste. The law is also important for those who live and work near such facilities: it determines what compensation they can count on in an accident.

Basic concepts

  • Policyholder — an individual entrepreneur or legal entity carrying out environmentally hazardous activity.
  • Insurer — an insurance company with an ARDFM licence for the relevant class of insurance.
  • Accidental environmental pollution — sudden, unintentional pollution resulting from an accident at the policyholder's facility.
  • Insured event — an accident that gives rise to the policyholder's obligation to compensate harm to the life, health, property of third parties and (or) the environment.
  • Beneficiaries — persons to whom harm has been caused and, in respect of harm to the environment, in the manner determined by legislation.

Obligations and rights of the parties

The policyholder

  • conclude a compulsory environmental insurance contract and avoid gaps in its validity;
  • provide the insurer with accurate information about the facility, technological processes and hazardous substances;
  • comply with environmental and industrial safety requirements and take measures to prevent accidents;
  • immediately report an accident to the insurer and the authorized bodies and take measures to reduce the damage.

The insurer

  • issue an insurance policy and explain the terms of insurance;
  • has the right to inspect the facility and assess the degree of risk;
  • determine the amount of harm on the basis of documents and make the payment within the established deadlines.

What matters in practice

  • Sums insured are expressed in MCI and differ depending on the policyholder's status and the scope of cover. Since the MCI changes annually, the monetary amount of the minimum sum must be recalculated at each renewal.
  • The contract covers accidental pollution specifically. Emissions and discharges within established standards are not an insured event.
  • The amount of harm to the environment is determined by methods approved by the authorized body, so it is important to keep the data of production environmental control and monitoring.
  • In an accident, the investigation report, data on the causes and scale of the pollution and timely notification of the insurer are of decisive importance.

Relationship with other types of insurance

Environmental insurance does not replace compulsory liability insurance of owners of hazardous facilities or employee insurance. One enterprise may be required to have several contracts at the same time, so the list of compulsory types of insurance should be checked comprehensively.

How to use the text of the law

Kazakhstan's environmental legislation has been updated, including with the adoption of the new Environmental Code. Before applying the downloaded text, check at adilet.zan.kz whether the law is in force and in what version, and which provisions on compulsory environmental insurance are now laid down in the code.

You can calculate the approximate cost of a policy in the environmental insurance calculator, and for hazardous production facilities in the hazardous facilities insurance calculator. Other programmes for business are collected in the liability insurance section. To understand which contracts your enterprise needs, you can get a consultation from a broker.