In
an apparent response to legislative maneuvers intended to restrict natural gas
fracking activities, and the attendant negative publicity surrounding the
practice, Nationwide Insurance confessed Thursday that an internal underwriting
memo circulating on environmental group websites which states that fracking
risks will now be excluded from Nationwide liability insurance policies
covering gas companies, the landowners who lease property for fracking operations,
and the contractors who provide water, pipe, lumber and heavy equipment to
fracking operators, is in fact genuine. According to the internal memo, “After
months of research and discussion, we have determined that the exposures
presented by hydraulic fracturing are too great to ignore,” the memo states. “Risks
involved with hydraulic fracturing are now prohibited for General Liability,
Commercial Auto, Motor Truck Cargo, Auto Physical Damage and Public Auto coverage.”
Nationwide
spokesperson Nancy Smeltzer says the Columbus, Ohio insurer did not intend its
personal and commercial lines policies to cover fracking risks. Smeltzer
admitted the memo is genuine, but says it was not intended for public dissemination.
Aon risk solutions Director of Environmental Practice Jeffrey Hanneman
describes Nationwide’s move as really unique, and denies it is the beginning of
an insurance industry-wide trend to limit coverage for fracking operators and
ancillary contractors. On the other hand, Associated General Contractors of New
York State President Mike Elmendorf says Nationwide’s move is bad news for his
members who provide goods and services to gas well drillers. Elmendorf points
to an extensive record of safely handled fracking operations across the nation,
and, in a play on Nationwide’s TV advertising slogan, says, “It’s hard to
fathom the rationale for this decision. It would seem Nationwide is not on job
creation’s side.”
