Sunday, July 15, 2012

Nationwide Insurance To Exclude Coverage For Fracking Waste Damages

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.”

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