Marsh Warns EU Companies of E&O Risks from Chemical Regulations

December 5, 2008

Marsh’s London office has issued a warning that companies that use chemical substances in the European Union (EU) could risk insurance implications “associated with their failure to adhere to the EU’s Registration, Evaluation and Authorisation of Chemicals (REACH) implementation framework.” REACH’s pre-registration phase started on June first 2008 and ended Monday.

“More than 100,000 chemical substances are commonly in use within the EU, most of which have not had their properties evaluated and documented for safety,” said Marsh. “REACH makes the trading, handling and usage of chemicals safer for European workers and citizens and promotes environmental protection. Any company trading in the EU, which either directly supplies chemicals into the EU, or has investments in the EU, which manufactures chemicals or uses chemicals, has to be compliant with REACH.”

The pre-registration phase required data to be submitted electronically to the European Chemicals Agency (ECHA). The data includes the following:
— The name of the chemical substance identified by the EINECs (European Inventory of Existing Chemical Substances) numbers, CAS (Chemical Abstracts Service) numbers, IUPAC (International Union of Pure and Applied Chemistry) names or other identity codes;
— The company name, address and name of the person providing the data;
— The envisaged registration deadline and tonnage band of the chemical substance.

Christopher Bryce, Industry Practice Leader, Chemicals and Life Sciences EMEA [Europe, Middle East & Africa] noted: “The implications of non-compliance with REACH are very clear. If the pre-registration is not complied with then, effective 1 January 2009, the use of the chemical substance in the EU will not be permitted until such time as a registration details have been provided to ECHA and a registration number is obtained.

“Non-compliance creates numerous risks and liabilities. For example, an error or omission in complying with the pre-registration phase will result in the ban of use of the chemical substance in the EU, while a ban on the use of the chemical substance will result in an interruption in the supply chain and related financial losses.”

Marsh also explained that the “error or omission may be the responsibility of the registrant; the ‘only representative’ in case of a non-EU located manufacturer or importer; or the ‘third party representative’ where a manufacturer or importer appoints such an organisation to perform certain tasks. It is vital that companies understand what their obligations are and ensure that they are compliant with REACH’s deadlines.”

Marsh also noted that it has “has developed a number of solutions to address the risks and liabilities relating to the pre-registration phase.” These include:
— Insurance for the manufacturer or importer can protect against their loss of revenue resulting from supply chain interruption due to an error or omission;
— Chemical substances suppliers can also secure insurance against legal liabilities in the event that their customers incur a loss of revenue as a result of their error or omission;
— Where either an only representative or third party representative performs tasks in complying with the pre-registration phase, it is possible for either of these two service providers to arrange insurance for their legal liability where they are proven to be negligent in performing the services of complying with pre-registration.

Source: marsh – or

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