BP Oil Spill Disaster Creates Opportunity for Environmental Contractors’ Market
No matter which television channel or Web site you turn to, the Gulf oil spill has dominated the news. This is an environmental crisis that will affect the region’s economic capabilities and natural resources for years, if not decades, to come.
Between two to four million barrels of oil have spilled into the gulf, compared to 257 thousand barrels during the Exxon Valdez event. The fishing and tourism industry, which was depressed before the tragedy, is now virtually non-existent. Gulf coast economies from Texas, Louisiana, Mississippi, Alabama, and Florida have all been affected, and scientists are predicting that the Gulf current may carry containments along the Florida Keys and up the east coast.
This disaster creates a tremendous opportunity for remediation contractors and consultants. Environmental contractors from across the country have flocked to the Gulf in search of clean-up contracts. More than 24,000 people are working as part of the response to the April 20, 2010, accident and its aftermath. The spill has created a wide array of jobs from remediation/spill response contractors to ship boat captains to day laborers. Many unemployed fishermen, construction workers, and general laborers are receiving OSHA HAZOPER training and aiding in the clean up.
We have received numerous phone calls about potential start-up businesses or companies opening up new divisions in this area.
Remediation Methods Used
More than 46,000 people – and nearly 7,000 boats – are now employed in the response, according to recent news reports. While fishing business was struggling before the disaster, fishermen are now making $1,200 to $3,000 a day laying floating booms that contain oil once it rises to the surface, according to Ocean Therapy Solutions LLC.
Where the oil collection is greatest, clean-up crews often create a “burning box,” which is a controlled burn over the water. In the marshes and other wetlands, contractors are mopping the oily sheen with absorbent oil pads, wiping each blade of grass, which can be time-consuming labor. In open water, boats are equipped with oil/water separators that skim surface water and can extract 2,000 barrels of oil per day. Thousands of workers comb the beach using shovels or shifting machines collecting tarballs on the sand. Unfortunately, oil can be buried underneath the sand, between tides, which will require sand incineration or other deeper cleaning methods.
Potential Coverage Issues
Below are some coverage issues agents should consider when obtaining pollution insurance for their clients.
Market Outlook
Due to the influx of submissions that environmental markets are receiving, they are starting to quantify the number of insureds involved in the clean up effort. Additional supplemental applications may be needed to gauge the amount of on and off shore activities, as well as the amount of work subcontracted. Some carriers are limiting their exposure to coastal premises/site pollution policies, possibly offering coverage with higher retentions or without first party clean up triggers.
While agencies scramble to secure pollution coverage for their clients being affected by the oil spill in the Gulf, they should also get a clear picture of the prospective insured’s scope of operations, contractual responsibilities, and qualifications. This is crucial in order to offer effective insurance solutions, as no two policies are the same in the environmental insurance marketplace.