Russia toughens liability regime

Federal Law No 225-FZ came into force in the Russian Federation on January 1 and penalties for violation will apply as from April 1. The law establishes stringent new requirements for liability insurance, with facilities now required to have in place sufficient insurance to cover for worst-case loss of life and property damage.

The law is a response to the accident at the Sayano-Shushenskaya hydroelectric plant in August 2009, when a turbine broke apart violently, leading to the collapse of the turbine hall ceiling and flooding of the turbine hall and engine room. 75 people were killed in the accident. Compensation was paid by the Russian government at the equivalent of around $31,600 per fatality. Operator RusHydro also paid some compensation and has also supported victims’ families with housing and education. 

Explaining the new law, Jeroen Spanbroek of Marsh Risk Consulting says: “The Sayana Shushenskaya incident prompted much debate around the safety and accountability of plants operating in Russia, both by domestic organisations and foreign firms. The new law seeks to act as a deterrent for future negligence and ensure victims receive appropriate compensation.”

The new law stipulates that owners of plants dealing in hazardous materials must have liability insurance covering bodily injury to workers and inhabitants as well as third-party damages. Insurance may only be provided by a member of the National Union of Liability Insurers. The requirement is also applied to each facility, rather than the entire organisation.