Argentina: New Requirements To Operate Environmental Insurance Policies

On July 22, 2016, Resolution No. 256/2016 (the "Resolution") issued by the Ministry of Environment and Sustainable Development (the "Ministry"), was published in the Official Gazette. The Resolution modifies Resolution No. 999/2014 1 issued by the former Secretariat of Environment and Sustainable Development ("Resolution SAyDS No. 999/2014"), and provides new specific requirements to be fulfilled by insurance companies to sell insurance policies for environmental damages with a collective impact.

The Resolution maintains the obligation to obtain an environmental approval pursuant to Joint Resolution No. 98/2007 issued by the former Secretariat of Public Finance and No. 1973/2007 of the former Secretariat of Environment and Sustainable Development, with technical reports issued previously by the Hazardous Waste Directorate and the Environmental Risks Evaluation Unit. To obtain such environmental approval, insurance companies must:

  1. prove a certain technical ability to perform remediation works, by the submission of Installed Capacity Reserve and Environmental Damages with Collective Impact Remediation Services Agreements signed by at least 2 hazardous waste operators and 2 transporters, which must be duly registered with the Argentine Registry of Generators and Operators of Hazardous Waste, and have valid Annual Environmental Certificates (the "Agreements");
  2. The Agreements must meet the following requirements:
  1. signatories' legal capacity certification;
  2. date of certification, evidencing a validity term of not less than five years;
  3. have a commitment from both parties to give notice to the Ministry of any amendment or substitution with respect to formal matters or contractual provisions;
  4. be submitted in copies certified by a notary public

The insurance companies that are currently authorized to operate environmental insurance policies must fulfill the requirements set forth by the Resolution within a 60 working-day term.

2. Requisites that are no longer required

Due to the modifications set forth by the Resolution, it is no longer required:

  1. that the proposed hazardous waste operators and transporters have a valid Fiscal Certificate to enter into contracts;
  2. the submission of agreements signed with two ex situ and two in situ operators of hazardous waste. Now it will be enough to hire only two operators (of any kind);
  3. that the operators and transporters proposed have certain technology and technical and operative capacity; 2
  4. that the operators proposed must be authorized to operate at least the waste streams and/or constituents for which they are specifically registered in accordance with Law No. 24,051;
  5. regarding the agreements between the insurance company and the hazardous waste operators and transporters, it is no longer expressly required that they include the prohibition to the operator to outsource the services contracted, nor permission by the operator to the insurance company of a minimum operation/intervention capacity consistent with the volume of the estimated/granted coverage by the insurance company.

Furthermore, and since the Resolution abrogates Exhibit II of Resolution SAyDS No. 999/2014, insurance companies are no longer expressly required to:

  1. set an address for the purpose of notices of a contamination event;
  2. submit a procedure to be followed by the insured when a contamination event take place;
  3. have no pending claims from the Federal Tax Authority;
  4. comply with certain indexes of solvency, net worth, liquid assets and investments.3

3. Other modifications brought in by the Resolution

The Resolution also abrogates Section 3 of Resolution SAyDS No. 999/2014, which provided that the Environmental Risks Evaluating Unit had to verify if the insurance plans for environmental damage fulfilled the requirements set by environmental regulations, as well as the correlation between the risks covered and the proven remediation capacity. It also abrogates Resolution SAyDS No. 42/2011, which provided an internal administrative proceeding to process the environmental approval.

Lastly, the Resolution abrogates Section 6 of Resolution SAyDS No. 999/2014, which obliged the former Environment Secretariat to provide a list of insurance companies that have fulfilled the requirements  on its website.

Footnotes

1 See our comments on the Resolution SAyDS No. 999/2014 in the #144 edition of Marval News http://www.marval.com/publicacion/?id=11859⟨=en).

2 Resolution SAyDS No. 999/2014 required: "i) Ex-situ Treatment: D10 or R5 (3) (incineration on land or use as a fuel), 5,000 Tons Annually; D5 (specially engineered landfill), 30,000 Tons Annually; D2 (biological treatment), 30,000 Tons Annually); ii) In-situ Treatment: soil decontamination (e.g. vapor extraction, biopiles, bioventing); groundwater decontamination (e.g. dual-phase extraction, or pump and treatment system); iii) Transport: liquid bulk, 10 units of no less than 25 m3; dry bulk, 10 units of no less than 20 m3".

3 Resolution SAyDS No. 999/2014 required that the insurance companies must comply with the following indexes: i) verification of solvency, on account of the maximum amount of Minimum Amount of Sufficient Entity or MMES, after its Spanish acronym), calculated according to regulations in force; ii) net worth equal or superior to 60,000 times the Correlation Factor provided in Resolution No. 1398/2008 by the former Environment Secretariat, as amended; iii) liquid assets and investments equal or superior to 120,000 times the Correlation Factor mentioned before. The Correlation Factor (Factor de Correlación) is currently of AR$ 800, according to Resolution No. 177/2013 issued by the former Environment Secretariat.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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