Competitive environmental Intelligence (CeI) for insurance professionals that sell or consult on cyber insurance.

Background:  Businesses that utilize computers can be vulnerable to a cyberattack.  In one situation a wastewater treatment plant was the target in which a hacker caused 300,000 gallons of raw sewage to spill into a river and flood the grounds of nearby businesses.

Cyberattacks (use of Malware) generally refers to a crime in which a computer is targeted.  Hackers can reprogram equipment to run at unsafe speeds, higher temperatures, open valves, change pressures…, that can create pollution liabilities and can threaten human health and the environment.

Hackers can impact the operation, control, performance, navigation, warning systems…, of watercraft, trains, aircraft, road vehicles, dam operations, HVAC, plumbing, electric, security systems, basically anything that depends upon computers can be the target of hackers.

Cyber policies I have reviewed, exclude pollution liabilities caused by a cyberattack.

Solution:  Businesses susceptible to hackers need to have an environmental financial assurance plan to address pollution liabilities caused by hackers?  Financial assurance can be in the form of a letter of credit, bond, monies in escrow, captive, or pollution insurance.

Pollution insurance policies are designed to fill in coverage gaps created by standard property and casualty policies such as pollution exclusions on cyber policies.  Compared to the cost of other financial assurance mechanisms, pollution insurance costs the insured fractions of a cent on the dollar.  Pollution policies can cover first party cleanup, onsite and offsite third-party bodily injury, property damage and business income, transportation pollution liability, legal fees, investigation costs, first party business income and much more.

As an example, one environmental insurance carriers’ definition of a pollution incident includes the following wording:  the discharge, dispersal, release, seepage or escape of any pollutant into or upon land, or any structure on land, the atmosphere or any watercourse or body of water, including groundwater, that results directly from a cyberattack;

If you sell cyber insurance, make sure you are covering pollution losses due to a cyberattack.  If you fail to, when an insured experiences a pollution liability from a cyberattack, your E&O insurance may be the only coverage they have.

The following link will take you to a press release regarding the new Certified environmental Strategist (CeS), online CE approved training offered through The National Alliance:  https://www.insurancejournal.com/services/newswire/2022/04/28/664841.htm

Do you work with food service business?  Businesses in the food service industry use a variety of equipment to prepare the food and beverages they offer their clientele.

I am often asked if food service businesses have any environmental exposures and the first thing that comes to my mind is poisoning customers.  The food service industry is under very tight regulations that require a variety of cleaning and disinfectant chemicals / compounds.

I can’t tell you how many hundreds of times I have heard of poisoning claims in the food service industry.

When talking with someone in the food service industry about their environmental exposures from cleaning and disinfecting equipment and facilities, the usual response back is, “We only work with environmentally friendly cleaning and disinfectant chemicals / compounds.”  Great, but what happens when one environmentally friendly cleaning compound is accidentally mixed with another environmentally friendly cleaning compound?  It can create a pollution liability including third party bodily injury, property damage, business income, cleanup costs, defense costs….

https://www.advisen.com/tools/fpnproc/news_detail3.php?list_id=26&email=chris@ermi.us&tpl=news_detail3.tpl&dp=P&ad_scale=1&rid=426592354&adp=P&hkg=i4l0f4B9AY

For a Certified environmental Strategist (CeS), the first step in developing and executing an environmental Management Strategy (eMS) is to find out, “Who you are doing business with?”

A business may do nothing wrong at all, but if a vendor/s the business hires causes for there to be an environmental liability, the business can still be held responsible.

A few years ago, Walmart and Home Depot each paid multi-million-dollar fines to the EPA for storm water runoff from their construction sites caused by contractors they hired.  Today, Walmart and Home Depot require contractors doing work for them to evidence environmental financial assurance by having Contractors Pollution liability (CPL) insurance in place in order to perform their services.

Even if you have an “environmental indemnification” in your contracts, without environmental financial assurance in place to back stop potential environmental liabilities, the contract may not be worth the paper it’s written on.

The links below will give you examples of businesses that have experienced environmental liabilities caused by vendors they hired.  These are reminders why step #1 in developing an eMS if to find out, “Who you are doing business with?”

• This link discusses how the Walters Art Museum had to close for three weeks after employees were exposed to vapors from a sealant used on their roof: https://www.advisen.com/tools/fpnproc/news_detail3.php?list_id=43&email=chris@ermi.us&tpl=news_detail3.tpl&ad_scale=1&rid=406053820&adp=D&hkg=VK2DS7z0FZ
• This link reviews how 6 workers died from a nitrogen leak at a chicken processing plant. Several vendors are named in the lawsuit: https://www.nbcnews.com/news/us-news/1-million-fines-recommended-nitrogen-leak-killed-6-georgia-poultry-n1274847
• Tyson Foods claims one of the largest fish kills in Alabama history was the result of an outside contractor that installed temporary piping that failed sending partially treated wastewater into the river: https://www.insurancejournal.com/news/southeast/2021/08/13/626864.htm
• The City of Fresno is suing a building contractor and engineering firm for doing faulty work on their surface water treatment facility that caused third party bodily injuries from improper ozone monitors being installed. The suit goes on to say that unsuitable and substandard parts were installed on the project: https://www.fresnobee.com/news/local/article256142187.html

environmental Strategist, between the lines:  Every business is impacted by environmental exposures and a Certified environmental Strategist (CeS) understands in today’s business environment, it’s imperative that businesses have an environmental financial assurance strategy to back stop potential environmental liabilities.  There are a variety of environmental financial assurance instruments available, i.e. bonds, insurance, captives (EnviroCap), letter of credit, self-insurance….

Simply due to the product they are dealing with the cement / masonry industry from manufacture (emulsifiers, silica, carbon dioxide and other air emissions), to use and disposal is not an environmentally friendly industry.

The EPA states “the cement sector is the third largest industrial source of pollution emitting more than 500,000 tons per year of sulfur dioxide, nitrogen oxide and carbon monoxide.”

Cement kilns used in the manufacturing of cement need to be heated.  The main source for heating is coal.  Due to the high cost of operating the cement kilns at high temperatures some cement kilns will burn hazardous waste as a supplemental fuel.  Cement kilns that burn hazardous waste (i.e. solvents; waste oil; sludge from petroleum refining, paints and coatings; waste oil…) must comply with both RCRA (Resource Conservation & Recovery Act) and CAA (Clean Air Act).  Bottom line, cement kilns that burn hazardous waste are being monitored by the Government and further supports the need for an environmental financial assurance strategy.

During manufacturing, construction, demolition, natural disasters…, cement dust is generated which is a hazardous air pollutant.

An article from The Economic Times points out, “cement produces more pollution than all the trucks in the world.”  https://economictimes.indiatimes.com/news/international/world-news/cement-produces-more-pollution-than-all-the-trucks-in-the-world/articleshow/69919005.cms

I could continue highlighting environmental exposures impacting the cement / masonry industry but simply due to the materials and processes used, they are great candidates for pollution insurance to meet their environmental financial assurance strategy.

The links below offer additional information on cement businesses negatively impacting our environment and human health.

https://indianapublicmedia.org/news/indiana-cement-plant-faces-730k-in-fines-for-air-pollution.php

https://www.epa.gov/newsreleases/epa-fines-mason-city-iowa-cement-manufacturer-alleged-clean-air-act-violations

https://ag.ny.gov/press-release/2021/attorney-general-james-holds-albany-area-cement-plant-accountable-years-water

https://www.wamc.org/capital-region-news/2021-04-30/federal-government-nys-reach-settlement-with-cement-plant

https://www.aggregateresearch.com/news/national-cement-fined-148000-over-mercury-emission-violations/

https://oag.ca.gov/news/press-releases/attorney-general-kamala-d-harris-announces-75-million-settlement-lehigh-cement

You can also go to the EPA Cement Manufacturing Enforcement Initiative  https://www.epa.gov/enforcement/cement-manufacturing-enforcement-initiative for more on the cement industry and additional cement plant settlements.

environmental Strategist, between the lines:  The links below highlight the vast array of environmental exposures impacting fire fighters.  Since 2002, almost two out of every three firefighters who died in the line of duty died of cancer.

What’s causing this tragedy for fire fighters?  In basic terms, when buildings and contents burn, they give off hazardous fumes along with contaminate the ground, ground water, neighboring property’s, waterways, natural resources and more.

Besides the obvious pollution cleanup after a fire, affected property owners can also be impacted by third party pollution liabilities from neighboring properties for bodily injury, property damage, business income and more.

We have strategized in the past, how pollution policies, are designed to fill in coverage gaps created by standard property & casualty policies.

As the old saying goes, there are two reasons a risk is not covered under an insurance policy:

1. Risks carriers can’t insure because the claims / losses can’t be calculated.
2. The risk is better covered under another type of insurance policy.

A great example of #2 are fire policies which generally offer $10,000 for Pollutant Clean-Up and Removal after a fire.  The inadequate limit of $10,000 is designed more to protect the insurance carriers from paying for the true costs of pollution cleanup after a fire.  This leaves property owners unknowingly self-insuring this exposure, which creates an increased E&O exposure for insurance agents.

Note:  Fire departments are immune from pollution liabilities while putting out a fire.

The solution, back stop a fire policy with an environmental site pollution policy to fill in the pollution liabilities coverage gap.

I have been asked about pollution coverage under “Debris Removal”.  Generally, policies contain language that debris removal does not apply to costs to extract pollutants from land or water or remove, restore, or replace polluted land or water.

https://www.fireandemsfund.com/cancer-in-the-fire-industry-and-a-lack-of-public-policy/:  As this link points out, “since 2002, almost two out of every three firefighters who dies in the line of duty died of cancer.”  “It’s not the fire itself, but the fumes that come off burning buildings.”

https://apnews.com/article/582a301c3a064a4f96c4c53b5e5d38a8:  This link discusses how cancer is the No. 1 line-of-duty cause of death for men and women who fight fire structures.  Much of the risk comes from burning plastics, chemicals and toxic materials that fire fighters are exposed to when they respond to a burning structure, car, or dumpster.

https://www.dir.ca.gov/dosh/wildfire/worker-health-and-safety-during-fire-cleanup.html:  Commercial and residential structures are built of materials that may release or break down into hazardous substances when burned.  The article (under Other Hazardous Substances) list some of the potential hazardous substances that may be released during a fire as: Arsenic, Cadmium, lead, manganese, nickel, Zinc, PAHs, PCBs, PBBs, PFAS, PFOAs, Dioxins and Furans.

If you breath air, drink water, consume food, you are impacted by and contribute to our PFAS / PFOA… contamination.  As I have said in the past, PFAS liabilities are going to make asbestos and lead look like elementary environmental issues.

PFAS contamination is not an IF situation.  It’s emerging and ongoing (Forever Chemicals) and impacting each one of us daily.  In Michigan, where I live, we have roughly 200 identified PFAS contaminated sites and guesstimates are this will grow to roughly 11,000, just in Michigan.  In the Sleeping Bear Dunes National Park, they are detecting PFAS chemicals in the rainwater.

Maine To Seek ‘Forever Chemical’ Contamination at Many Sites.  This link talks about PFAS chemicals in sewage sludge and paper mill sludge that has been applied as farm fertilizer.  This agricultural practice takes place around the country.

https://www.insurancejournal.com/news/east/2021/10/15/637444.htm

As environmental Strategist, our job is to assist businesses to manage and transfer their environmental exposures and PFAS is one you need to be prepared to coach client’s and prospects.

As the link below points out the Federal government is going to establish PFAS standards.  You want to make sure you are on the front side of this by getting your insureds to inventory what they use that contain PFAS chemicals and find out what alternatives are available for replacement.

https://www.insurancejournal.com/news/national/2021/10/20/638154.htm

As an example of how real PFAS liabilities are just click on the link below.  You can also go to Google and type “PFAS Liability Payments” and read for yourself all the businesses that are dealing with PFAS liabilities.  PFAS liabilities are going to impact businesses that manufacture, distribute, use, or sell PFAS chemicals or products that contain PFAS chemicals.

https://www.insurancejournal.com/news/southeast/2021/10/20/638080.htm

PFAS Chemicals in Breast Milk

https://www.seattletimes.com/seattle-news/environment/seattle-study-of-breast-milk-from-50-women-finds-chemical-used-in-food-wrappers-firefighting-foam/

environmental Strategist, between the lines:  As the links below point out a chemical leak at a Houston water park left dozens suffering.  “The chemicals involved included hypochlorite solution and 35% sulfuric acid”.  These are very common chemicals used in swimming pools, whirlpool spas, laps pools and of course water parks.

Who are your client’s that can experience the same pollution liability as Six Flags?  High Net Worth Insureds, hotels / resorts, country clubs, municipalities, public schools / colleges, homeowner associations, apartments, condominium associations and much more.  Site pollution liability insurance can protect your insureds for this type of pollution liability.  It also very common to store extra pool chemicals onsite and site pollution coverage addresses that environmental exposure as well.

The second link is a follow up to the first article which identifies the cause of the chemical leak as an improperly installed water filtration system by a contractor they hired.  Besides the bodily injury claims you must think about Six Flags Reputational Risk as well as loss of revenue at its 27 parks due to bad publicity.  Pollution policies offer Image restoration coverage.

Your insured’s that hire third party vendors to maintain and take care of pools / spas…, you want to make sure the vendor has an environmental financial assurance plan in place and Contractors Pollution Liability (CPL) insurance will meet that need.  You want to make sure your insured is listed as an additional insured, and the CPL coverage is primary with a waiver of subrogation.  The CPL can also cover the third-party business interruption experienced by Six Flags.

Do you think a $1,000,000 CPL policy will cover this?  What about the 29 people taken to hospitals or the 200 that have joined in a lawsuit?  Make sure to discuss with your insured’s pollution limits and who they do work for.

Dozens treated after chemical leak at Texas water Park:  Associated Press

Posted: JUL 18, 2021

A chemical leak at a Houston-area water park left dozens suffering from minor skin irritation and respiratory issues Saturday, authorities said.

Twenty-nine people were taken to local hospitals following the incident at Six Flags Hurricane Harbor Splashtown in Spring, the Harris County Fire Marshal’s Office tweeted. Thirty-nine others declined to be taken to a hospital after undergoing decontamination procedures.

A local outlet reports that some of those who became sick were children, including a 3-year-old who was hospitalized in stable condition.

The chemicals involved included hypochlorite solution and 35% sulfuric acid, officials said.

“The safety of our guests and team member is always our highest priority and the park was immediately cleared as we try to determine a cause,” Hurricane Harbor Splashtown spokesperson Rosie Shepard said in a statement, according to news outlets. “Out of an abundance of caution, the park has been closed for the day.”

Authorities are investigating the cause of the incident, which they said was contained to one attraction at the park.

“Grateful for the swift action from first responders today at Splashtown,” Houston’s chief elected official, Lina Hidalgo, tweeted. “We’ve issued a closure order to investigate and ensure the park meets all requirements before reopening again.”

https://www.newsnationnow.com/us-news/southwest/dozens-treated-after-chemical-leak-at-texas-water-park/

Texas water park chemical leak blamed on filtration system:  The Associated Press August 5^th 2021

Six Flags water park says a chemical exposure that send dozens of people to hospitals was caused by “Improper installation” of a water filtration system

Six Flags officials said Wednesday that a third-party service company improperly installed the system at Hurricane Harbor Splashtown, causing pool-sanitizing chemicals to be released in an outdoor kiddie pool area on July 17.

“We have determined that the vapor release involved a low-level mixture of the pool-sanitizing chemicals which was discharged from the bottom of the pool through the water filtration system,” said Jason Freeman, Six Flags Vice President of Safety. “The vapor was well below any reportable quantity.”

About 30 people were hospitalized as a result, and 200 people have joined a lawsuit against Six Flags, which owns the water park, the Houston Chronicle reported. Those who fell ill complained of headaches, vision problems, nausea, vomiting, dizziness and sore throats.

Six Flags did not identify the company that installed the system. The park was reopening to the public Thursday.

https://abcnews.go.com/Entertainment/wireStory/texas-water-park-chemical-leak-blamed-filtration-system-79288878