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PIA: Key Questions For Industry Before Oil Makes Landfall

What is now an environmental disaster will become an economic disaster once the oil still spewing from the Deepwater Horizon oil leak reaches the shore...
June 9, 2010

What is now an environmental disaster will become an economic disaster once the oil still spewing from the Deepwater Horizon oil leak reaches the shore along the Gulf Coast, according to Jon D. Spalding, president of the National Association of Professional Insurance Agents. As a result, he said the insurance industry needs to prepare now to answer questions from consumers about what's covered and what's not.

"As the oil moves toward the coast, there are insurance coverage issues that the industry needs to consider and address before the crude makes landfall," Spalding said. "All that oil has to end up somewhere, and chances are it's not simply going to float out into the ocean and head over to BP's headquarters in Great Britain. Just like when hurricanes threaten, the Gulf Coast of the United States is under an oil watch."

Among the specific coverage issues that will need to be addressed are:

  • Wind driven oil affecting homes, vehicles and other property.
  • Health effects on those working in the recovery efforts.
  • Private vessels operating in the recovery effort being coated with layers of oil.
  • Fish deemed not fit for human consumption due to oil, and the resulting losses to individual fishermen.
  • Businesses that may be forced to shut down, or may have major declines in revenues due to cancelled events or vacations.
  • Independent BP franchise owners who suffer economic losses from consumer boycotts.

"The financial impact will be devastating to our community," said former PIA National President Robert P. Page of Houma, Louisiana. "So many of our residents work directly in the oil industry as well as our fishing industry. The state of the health of our Gulf may not be known for many years. Currently all fishing, both recreational and commercial, is closed off the coast of Terrebonne Parish and more than half of Louisiana's coast is closed. Without the oil industry and the fisheries, our community will become a ghost town and we may never recover."

On June 6 Admiral Thad Allen, the Coast Guard commander in charge of the federal response to the oil spill in the Gulf of Mexico, said that even if the leak of crude oil is stopped by summer, the slick now spreading in the Gulf could not be contained until autumn or even far later. BP has installed a capping device that is capturing more than 10,000 barrels a day, an improvement over earlier efforts to contain the oil. Officials say it is impossible to gauge what fraction of the gushing oil this represents.

What It Means to Agents: One thing is certain: the oil will ultimately find its way onshore, or into the food chain, and Professional Insurance Agents will help their clients understand how their policies may or may not respond to the damage done by the oil spill.

PIA: Industry Must Address Key Questions (South Florida Business Journal 5/4/10)
 
PIA: Industry Must Address Key Questions (MarshBerry 5/4/10)