As per Robin Somerville’s blog above, hydraulic fracturing, or “fracking” as it’s more commonly referred to, is quickly emerging as one of the more significant risks facing not only the Energy market but the Environmental insurance industry too.
While fracking technology is relatively simple, the potential environmental issues and toxic tort liabilities surrounding it are a bit more complex as it has become a very contentious issue among regulatory agencies, exploration companies, environmental activists, land owners, the insurance industry and many other affected stakeholders.
There is much debate and concern surrounding fracking due to the chemicals utilized—for example acids to dissolve minerals and create cracks and surfactants to make fluids more slippery—and the massive amounts of wastewater generated. Not to mention the fear of radioactive materials and other contaminants potentially finding their way into water supplies.
While General Liability carriers are still providing a certain degree of “sudden & accidental” pollution coverage, the environmental insurance carriers have been a lot more selective in their appetite when underwriting these risk in terms of providing any meaningful “gradual” pollution coverage (particularly in the Marcellus shale formation which has received most of the negative media attention lately).
Our Environmental Practice will be featuring a more detailed discussion in our upcoming 2012 Winter Newsletter, which I will be sure to blog about.
|This post was part of the special feature about What Risks Will Emerge in 2012? published January 24, 2012. The feature also covered emerging risks in these other fields:|
Power & Utilities
Supply Chain Interruption