“But I don’t have any exposure!”  As one of the most common and predictable objections to purchasing a discretionary product like Site Pollution insurance, this protest has been heard many times by producers. But in a world where a changing climate will drive natural disasters to increase in both frequency and severity, the informed and savvy producer can take this bad news and turn it into a growth opportunity. This opportunity results from a predictable consequence of all natural disasters that is nearly universally shared:  the loss of power.

When parts of the electrical grid are destroyed—whether due to fire, flood, ice, or wind—the resulting power failure can lead to a wide variety of pollution-related losses. Some of these can be dramatic, like the August 31, 2017 explosions at the Arkema chemical manufacturing facility in Crosby, TX. In that case, hurricane-related flooding was so severe that the plant lost not only its primary power, but also two sources of backup power, resulting in the failure of critical refrigeration. Chemicals onsite subsequently ignited, portions of the facility exploded, and intense fires were allowed to burn themselves out over several days. Within a week, first responders had filed suit for exposure to toxic fumes, after 15 police officers and 8 medical personnel were hospitalized. 

Perhaps less dramatic but no less harmful is any breakdown of a property’s HVAC systems. Because these systems maintain proper temperature and humidity levels within a structure, their failure can result in moisture accumulation and rapid mold growth. This fact presents a challenge for all types of commercial properties. For clients that serve vulnerable populations (e.g., childcare centers, assisted living, or medical facilities) or oversee significant property exposures (e.g., retail centers, warehouses, or office buildings), the introduction of biological hazards to indoor environments can lead to considerable liability for bodily injury and property damage. But it doesn’t end there.

Prudent property managers may tell you they have already considered these risk factors and taken steps to install backup power generators. While this move may seem like a good decision, it is not without pollution risks of its own. First, if installed or used improperly, the generators can result in carbon monoxide poisoning and sometimes death, as happened throughout Florida in the days following Hurricane Irma.  Second, even their correct usage requires the onsite storage of fuels that represent a known pollution hazard and may necessitate tank insurance. Third, in extreme cases like in post-Hurricane Maria Puerto Rico, the widespread usage of diesel generators for more than 3 months is contributing to equally widespread air pollution, as diesel exhaust is laced with more than 40 toxic contaminants.  Finally, as noted above in Arkema’s situation, even the backup generators may be lost in catastrophic circumstances.

Which returns us to the topic of a true backstop. Current market trends have led to broader coverage and cheaper pricing for Site Pollution policies than ever before. As such, there has never been a better time to discuss the role this product can play in rounding out a complete risk management program.  Because when the lights go out, your clients don’t need to be alone in the dark.