In the weeks following the implosion of a massive tank at a Washington paper mill that killed 11 workers and spilled hundreds of thousands of gallons of chemicals, believed to be the deadliest industrial accident in state history, managers of similar operations have been dialing up their insurance brokers to find out how well they’re protected.
It took days to recover all the bodies of missing workers who died in the May 26 blast at the Nippon Dynawave site in Longview. In additional to the workers killed, seven other workers and a firefighter were also injured by burns from the chemical known as white liquor that was spilled in the blast.
With the deaths, damage and spillage into the Columbia River, as well as potential lawsuits already lining up, it’s likely to be a costly event for the plant’s owners. It’s not immediately clear what coverage the operation has or who insures it. But the event, which has been heavily reported on by media, has other manufacturers in the industry checking on their insurance coverage.
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Brokers in the environmental specialty line are fielding calls from clients to discuss their coverage, according to Dennis Willette, senior vice president and head of environmental at Westfield Specialty Insurance.
“I’ve had a lot of inbound calls from my brokers, who have been receiving a lot of inbound calls from their clients,” he said.
Many general liability policies have a pollution exclusion structured mainly to address this type of issue, which is why the environmental market exists.
Brokers like Westfield Specialty provide coverage on an excess basis, and the market also provides a combined general liability and pollution program. There are myriad ways to buy these coverages. Some insureds buy a limited time-element coverage, others a broader coverage.
“Depending on what they buy will really dictate the level of coverage that they have, and then further to that, one of the challenges is that the aggregate is typically shared with their general liability,” Willette said. “And if they buy the pollution coverage, it may not be available to them depending on whether or not their limit has been exhausted by any other general liability claims and vice versa. If there’s a large pollution claim such as this, their general liability limit may be exhausted by the pollution limit, so that’s the blended model.”
The environmental line also offers dedicated towers of pollution liability insurance for clients not shared with the general liability policy, providing affirmative and often broader pollution coverage, he added.
Willette, whose background includes work as an environmental scientist, said the costs from the experts that the company likely has on site trying to understand what happened and to get the plant back into operation alone is going to be expensive.
“What I can say is the cost to investigate, sample, remediate, resolve and settle these concerns gets expensive very quickly,” he said.
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Lawmakers and family members are calling for an impartial investigation of the incident, and at least two families said they have retained lawyers, according to media reports.
Investigators from the U.S. Chemical Safety Board were already on site.
The Washington Department of Labor & Industries also has investigators at the site to conduct a workplace safety probe to determine what happened and if there were safety violations connected to the incident.
L&I, the regulatory authority for workplace safety in Washington, officially opened its investigation this week, which includes inspectors who focus on high-hazard chemical industries. The agency said it plans to interview witnesses and conduct a physical inspection of the site.
By law, these investigations must be completed in 180 days. The agency said it anticipates using all the time available due to the complexity and scale of the investigation.
Roughly 550 people work at the plant, and plant operators had agreed to pay workers while operations were shut down. But now U.S. Rep. Marie Gluesenkamp Perez is calling on the mill owners to provide a written guarantee that workers will continue receiving pay and benefits.
Gluesenkamp said workers were told they will only be paid through June 7, leaving hundreds of employees facing the possibility of losing their paychecks if the investigation and shutdown continue beyond that date, according to the news website MyNorthWest.com.
As costs rack up, Willette said he thinks brokers will use the increased awareness to educate clients about environmental insurance products.
“I don’t see this being a market-moving event in terms of it changing what’s offered in the marketplace,” he said. “Quite frankly, I think it’s going to be used as an educational opportunity to help take what is the underinsured or not-insured segment of eligible buyers and move some of those into the segment of buyers who are protecting themselves and taking advantage of the risk transfer solutions provided by the environmental insurance industry.”
Topics
Agencies
Pollution
Washington
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