IRMI Update—Issue #149
An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
November 29, 2006
In This Issue
Colleague,
More than 50,000 federal grants providing up to $150,000 for use to relocate
or rebuild Hurricane Katrina damaged homes are expected to be made to New Orleans
residents. In its October 19 issue, USA Today reported that nearly 75 percent of the homeowners applying for these grants
so far (10,634 out of 14,534) say they'll rebuild their homes in flood areas,
even though complying with upgraded city construction requirements (to elevate
by 3 feet) is unlikely to prevent them from being flooded should the levees
fail again. An official with the recovery authority was quoted as saying the
new rule, which was hurriedly passed to qualify for the federal funding, isn't
perfect but will help them buy insurance.
This really disturbs me. Federal and state programs nonsensically encourage
or even subsidize building in flood zones and on hurricane-prone coastlines.
(The NFIP program is also a subsidy since the premiums charged do not reflect
the risk insured.) Then, when the insurance industry shows the wisdom to refuse
to cover the risk or to charge an appropriate premium, it is criticized by politicians
and the public.
What do you think? How can/should governments motivate rational decision-making
in choosing where to build and incorporating adequate safeguards in buildings
while maintaining humanitarian compassion? Does the insurance industry do enough
to encourage responsible building codes? What should the insurance industry
do to educate the public about these matters? What other steps should the industry
take to avoid a bad rap from this situation? [See reader responses.]
As a reminder, Levine on California Workers
Compensation Premium and Insurance will no longer be available after
December 15. Add it to your
library at an incredibly low price now.
Thank you for subscribing to IRMI Update.
Have a great day.
Jack
Jack P. Gibson, CPCU, CRIS, ARM
President
IRMI
Avoid Naturally Occurring Substances Exclusions In
Pollution Policies—For years, environmental liability associated with
naturally occurring substances such as silica, mercury, arsenic, radon, and
probably the most prevalent, asbestos, has been a part of the environmental
liability risk profile for many industry groups. Nearly all of these substances
are recognized as hazardous waste or substances by the Environmental Protection
Agency and therefore present unusual exposure to many property owners, developers,
contractors, and others. Thought to once exist only in the western states, naturally
occurring asbestos is now being uncovered and excavated in many states. From
California to Connecticut, there has been an increase in interest, news articles,
and public attention directed at naturally occurring asbestos.
The issue that compounds the problem is the naturally occurring substance/pollutant
exclusions in certain environmental or pollution liability policies. Some are
fairly recognizable and straightforward exclusions. Others are more cryptic—being
found in the definition of pollutants, pollution conditions, etc. Either way,
such policy conditions and exclusions will have a significant impact on coverage,
depending on the type of business being conducted. For many organizations, buying
the proper pollution policy is always a prudent alternative for financing environmental
loss. However, there are about 150 different pollution liability forms offered
by about 20 different companies, and it is important to understand what you
are selling or buying. Avoiding limitations on coverage for naturally occurring
substances is one important area on which to focus.
By: Jeff Slivka, ARM, CRIS
New Day Underwriting
Bordentown, NJ
www.NewDayUnderwriting.com
Suggest a Risk Tip. Send us a practical tip (less than 300 words) for identifying and managing risks,
buying insurance, managing claims, or filling gaps in insurance coverages. Submit your tips. We'll
acknowledge your contribution as we did for Jeff.
This person will be primarily responsible for timely and accurate review
and analysis of contractual language for new construction projects. This position
directs what insurance coverage is considered necessary for each project, the
pricing of the coverage, and the implementation of the coverage. Minimum of
5-7 years of experience in a similar role for a contractor, broker, or insurance
company. Apply
online.
There are now over 800 risk management and insurance articles on IRMI.com.
Below you'll find summaries of some recent additions with links to the articles.
More than 600 construction risk and insurance professionals have received
their Construction Risk and Insurance Specialist (CRIS) designation. The CRIS
continuing education program has also been approved for CE credit in all 49
eligible states. Learn more about this specialized curriculum and low price here.
If you're still scrambling to fulfill your continuing education (CE) requirement
for 2006, IRMI has the answer with online courses that are easy to take and
informative as well. We have recently added two new insurance law courses and
a flood insurance course to the library. You can purchase enough courses to
meet most state's annual CE requirements for less than $50! For more information
or to order one of these or other CE self-study courses, see the Training and Education section of IRMI.com.
Matthew Leitch, an independent consultant and researcher in the United Kingdom,
writes the risk management and internal control column for IRMI.com. Mr. Leitch
is a chartered accountant with a BSc in psychology from University College London.
Through his research and consulting, he aims to make control less costly, more
fun, and more effective. His IRMI.com column provides insight on embedding risk
management, dealing with Sarbanes-Oxley, and understanding COSO guidelines.
For more information on Mr. Leitch, see his full biography and a list
of his articles.
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