Environment Ministry Directs CPCB to Ensure Better Implementation of Public Liability Insurance Act, 1991

The Ministry of Environment, Forest and Climate Change has issued directions under section 18 (1) (a) of the Water Act and the Air Act to Central Pollution Control Board (CPCB) to ensure better implementation of Public Liability Insurance (PLI) Act, 1991. The Public Liability Insurance (PLI) Act, 1991 makes it obligatory upon the user industries handling 179 types of chemicals and compounds and other classes of flammable substances to subscribe a special insurance policy to cover the liabilities likely to arise on account of any chemical (industrial) disaster/accident and payable to those affected people who are not the workers on ‘no fault basis’/ ‘absolute liability’. The Act establishes an Environment Relief Fund (ERF), which is subscribed by all such user industries by an amount equal to the annual premium amount of such insurance policies. The directions have been issued on September 1, 2015 and will ensure that all the liable handling user industries subscribe to the PLI insurance policy and deposit the prescribed amount in Environment Relief Fund (ERF).

CPCB, in turn, will issue directions to all the SPCBs to ensure that Consent to Establish (CTE) or The Consent to Operate (CTO) is not granted or renewed to any such industry, which do not comply with the obligation under PLI Act, 1991. CPCB will also direct the SPCBs and PCCs to ensure that SPCBs/PCCs will necessarily include PLI insurance policy as one of the check points. SPCBs and PCCs will submit a compliance report to CPCB. The CPCB will submit the first compliance report within 60 days and the quarterly progress report till next three years to the Central Government thereafter.

PLI insurance policies are sold by General Insurance Companies. The face value of the insurance policy may be paid-up-capital for the unit or Rs 50 (fifty) Crore, whichever is less. The amount of policy (ies) is decided on the basis of the assessment of damage estimated by the maximum credible loss analysed and paid up capital of the industry. The Ministry has assigned the fund management with United India Insurance Co. Ltd. (UCIIL), which has a kitty of Rs. 573 crore, as on 31.03.2015. District collectors of the affected district, on account of any chemical (industrial) disaster/accident arising out of the handling of such chemicals or compound, are empowered to award the compensation from this fund. There is no expenditure from the fund so far, except fees to fund manager i.e. UCIIL.

There are many cases where owners have failed to subscribe PLI policies because of ignorance. In view of the above strengthening the implementation of the provisions of the Act so far, the Ministry has initiated several steps to strengthen the implementation of the Act, some of which includes:

1. All the State Pollution Control Boards(SPCBs)/Pollution Control Committees (PCCs) for UTs have been advised on 16th April, 2015 for including PLI insurance policy as one of the point in the check list before according or renewing CTE or CTO to an industry with a follow up letter on 16th June, 2015.

2. A meeting of general insurance companies had been convened on 29th April, 2015 to sensitizing them.

3. A letter has been written to Insurance Regulatory and Development Authority (IRDA) on 1st July, 2015 to draft a standard PLI policy for uniformity.

4. An advisory has been written in July, 2015 to PSUs, big industry houses and industry associations such as FICCI, CII, CMA, ICC, etc. to subscribe to PLI policy and pay ERF.

PLI Act is administered by the Ministry of Environment Forest and Climate Change.