Robert A. Rosen

The New Basel Capital Accord

During the course of this year, the Basel Committee on Banking Supervision will complete the drafting of a new accord setting forth the capital requirements for international banks. This new Basel Capital Accord, or Basel 2, is scheduled to take effect in member countries, including the United States, by year-end 2006, establishing the basic capital frameworks for Committee member countries. It is widely expected that it will be adopted by supervisors worldwide as well. In fact, work has already begun in a number of countries on draft rules that would integrate Basel capital standards with national capital regimes. The following examines the innovations of Basel 2 and specifically the Committee’s inclusion of “operational risk” in the bank’s overall capital determination. In Part I of this two-part article, we take a look at the scope of the new Accord and its implicit inclusion of environmental exposures as part of a bank’s operational risks. Part II will explore the potential impact of technology risks in the banking sector and the windfall almost certainly heading the way of the insurance industry in covering those risks banks are ill-equipped to address themselves.

European development and environmental risk: Sustainable growth at what cost?

Abstract Protection of the environment is one of the major challenges facing Europe. Environmental damage has been growing steadily worse in recent decades. Every year, some two billion tons of waste are produced in the European Union Member States. The European Community has been criticized for its focus on trade and economic development at the expense of environmental considerations. Today, there is a growing consensus that the European model of development cannot be pursued at the expense of the environment. Recently, the European Commission took stock of its efforts in this regard. This article examines the EUs approach to Environmental Action before the dawn of the new millennium and its plans for the future.

The Policyholders’ “All Sums”; Argument: Sound and Fury Signifying Nothing

In recent years, policyholders have formulated a liability theory of coverage predicated upon the “all sums”; language commonly found in Comprehensive General Liability policy insuring agreements. The increasing reliance on this theory by policyholders has led to some particularly unusual results in the environmental litigation context. This article discusses the legal underpinnings of the “all sums”; position and examines its continued viability in the wake of growing opposition from courts across the country.

The New Basel Capital Accord: Part II: Technology Risks for Banks and the Role of Insurance

In Part I of this article, we examined the scope of the new Basel Capital Accord, or Basel II, its introduction of “operational risk” in a bank’s riskto-capital equation, and its implicit inclusion of environmental exposures as part of a bank’s operational risks. In Part II, we explore the potential impact of operational risks on two important risk mitigation techniques, outsourcing and insurance.

A Single Euro Market for Insurance Services: A Nice Idea, But……

On March 18, 2002, the Council of the European Union adopted its Common Position on the proposed Directive, implementing a number of amendments requested by the European Parliament and integrating several new elements of its own. In its current form, the proposed Directive attempts to guarantee that any person or entity engaging in insurance (or reinsurance) mediation be registered on the basis of “a minimum set of professional requirements”. The significance of this proposal should not be overlooked. When, and if, the Directive is ultimately adopted, the European Community of 15 countries will have a single instrument applicable to insurance and reinsurance intermediaries of all types. The belief is that, under a single instrument, EC rules will be clearer and more consistent, offering greater transparency and certainty to both intermediaries and customers. The balance of this article takes a brief look at the scope and effect of the Directive and whether it promises to achieve its purported objective.

The Proposed Framework for Environmental Strict Liability in Europe: The Polluter Pays…Possibly

On January 23, 2002, the European Union took a bold step toward developing a common approach to environmental liability, one that imposes a strict liability standard aimed at ensuring that the “polluter pays”. However, opinion is divided both on the merits of this standard and on the approach taken at the EU level. This article examines how the EUs proposal and the imposition of environmental strict liability may herald a new era for environmental experts, insurers, and lawyers across Europe.

Current international developments

The 1976 catastrophic release of toxic substances in Seveso, Italy led to the development of two significant environmental regulations at the European level, known as the Seveso Decrees. Despite the intent of these decrees to control and eliminate the risk of future such disasters, Italy, like most of the Member States, proved largely unsuccessful in implementing Seveso I. Seveso II is scheduled to replace Seveso I early next year, prompting many to ask whether its fate will be any different than that of its predecessor. In Part I of this article, we focus on the challenge presented by implementation of the Seveso Decrees. In Part II, we will analyze recent landmark environmental legislation in Italy (the Ronchi Decree) that seems at first glance to bring some coherence to Italys patchwork of environmental regulations, suggesting that the time may be right for Seveso II.