Statement on Pollution Forms and Coverage Issues written by WQIS President and CEO Richard Hobbie III and delivered by WQIS Vice President, Legal & General Counsel, Andrew Garger on March 14, 2013.
Insurance in its basic form is the process on assessing risk and then charging a premium that will allow the payment of all claims and costs and return an acceptable profit to the capital provider. As the analysis of risk and its predictability increases capacity, favorable conditions, high limits and appropriate pricing are available. However, where the degree of risk and predictability become uncertain, then conditions, pricing, limits and availability of insurance become more restricted. With respect to pollution risks, there has always been concern in the insurance market that the legal basis for assessing the risk and associated costs are uncertain since there has only been limited litigation on some of the critical areas of modern pollution statutes since the enactment of the Water Quality Improvement Act of 1970.
This paper is intended to highlight some of these critical areas from an insurer’s perspective and to comment on the general ramifications in the marine insurance market.