Nationwide Ins. says: No Fracking Insurance Coverage
From the Times Union, 7/12/2012:
Insurer: No shale gas coverage
Nationwide says policies exclude hydrofracking
By Brian Nearing – Times Union
Published 10:15 p.m., Thursday, July 12, 2012
ALBANY — One of the nation’s largest insurance companies has decided it is too risky to provide coverage on land, property or equipment involved in natural gas hydrofracking.
Nationwide Mutual Insurance Co. released a statement Thursday that said none of its personal or commercial insurance policies were “designed to provide coverage for any fracking-related risks. … We do not have a comfort level with the unique risks associated with the fracking process to provide coverage at a reasonable price.”
Nationwide’s statement continued, “Risks like flooding and mining or drilling are not part of our contracts, and the customer should seek out an insurer that handles these customized types of insurance.”
The company did not respond to follow-up questions or indicate whether it had informed its customers in New York of its stance.
It was not clear how many customers Nationwide has in New York who might be affected by the company’s decision. Attempts to obtain that information from Nationwide and the state Insurance Department were not successful.
Requests for comment to the Independent Oil and Gas Association of New York, an industry group that represents the drilling industry, were not returned.
Opponents who don’t want the state opened up to hydrofracking said the unwillingness of a major insurance company to take on the risk of potential damage from hydrofracking shows that concerns over pollution of water and air are real and substantial.
The state Department of Environmental Conservation is weighing proposed rules that would allow hydrofracking to begin in the Marcellus Shale, a gas-rich underground formation that runs through the southern part of the state from Buffalo, through the Southern Tier and Finger Lakes and into the western Catskills.
That review has been a three-year process that has become politically contentious, as opponents have grown increasingly organized in a bid to block the technique, which is already in use in Pennsylvania and other states. Some local governments have passed measure banning fracking within their boundaries.
Hydrofracking relies on a high-pressure mix of chemicals, some toxic, combined with sand and water pumped deep underground to break up rocks containing trapped bubbles of natural gas that rise up the drilling well to the surface.
Opponents claim that the practice can pollute water and air, while the industry insists the practice is safe.
“First mortgage companies decided not to offer mortgages to people who had fracking leases. Now it’s insurance companies,” said Dan Cantor, executive director of the Working Families Party, on behalf of New Yorkers Against Fracking, a coalition of environmental and community groups that don’t want the state to approve drilling.
Sue Rapp, co-founder of Vestal Residents for Safe Energy, a Southern Tier anti-fracking group, said it was “terrifying that insurance companies have decided that fracking is too dangerous to insure, while our government is poised to let it go forward. Clearly insurance companies assume the risk of accidents is great enough that they will lose money, which means that our lives and livelihoods are in danger.”
While DEC is still weighing a proposed roadmap known as a generic draft environmental impact statement, and regulations that would allow the start of hydrofracking, published reports last month indicated Gov. Andrew Cuomo was considering a plan to allow limiting hydrofracking in portions of some Southern Tier counties where local political and community support was strongest.
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