Environmental Insurance

The 1994 reform of the Argentine Constitution incorporated certain standards regarding the preservation and protection of the environment (new article 41 of the Argentine Constitution). In the event of an environmental damage, the Constitution requires, as a priority, that the damage be repaired.

In 2002, the Federal Congress enacted the General Law on the Environment (Law No 25,675), establishing minimum environmental protection standards. In order to guarantee the availability of sufficient funds to comply with the constitutional mandate of repairing environmental damage set forth in the Argentine Constitution, article 22 of the General Law on the Environment requires persons or entities involved in activities that may entail a risk to the environment, the ecosystems and its elements, to purchase and maintain environmental insurance coverage.

Since the enactment of the General Law on the Environment, the Federal Secretariat of Environment and Sustainable Development and the Secretariat of Finance issued several resolutions intended to regulate the environmental insurance.

In the federal order, since 2009 the Secretary of Environment and Sustainable Development began to require proof of the maintenance of the environmental insurance to generators of hazardous waste applying to renew their annual permits.

By means of Disposition No 4059/2009, published on September 18, 2009, the Provincial Environmental Impact Assessment Bureau of the Province of Buenos Aires requires proof of maintenance of the environmental insurance to certain industries intending to obtain permits, authorizations or renewals contained in the provincial Law of Industrial Establishment and in the provincial Law of Water and Atmosphere Protection.

According to said disposition, subjects bound to comply with the environmental insurance are, for the moment, industrial establishments with high potential of environmental impact located in the river basins Matanza-Riachuelo and Reconquista and in the petrochemical poles of Dock Sud, Bahía Blanca and Ensenada. Depending on the volume of annual sales, the new provincial regulation allows for certain entities falling within its reach to be momentarily exempted from it.

While regulators are increasingly requiring proof of compliance with the environmental insurance required under the General Law on the Environment, the insurance market and the industrial sector are still hesitating about the sufficiency of the products offered in the market. This new provincial regulation will certainly deepen the different perceptions on this matter between industries and regulators.