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Global Chief Underwriting Officer, Environmental, AXA XL

2020 will be remembered as a year like no other. While the global pandemic dominated our attention, there also was no shortage of environmental news. There were oil spills in Russia and Venezuela that threatened wildlife and important waterways. As of early December, there were 52,934 wildfires in the U.S. that burned some 14,905 square miles this year. And on a positive note, with fewer vehicles on the roads and various shutdowns, many areas noted very visible pollution decreases.

The predominant theme in 2020, and over the last decade, has been climate change. That focus is understandable – climate-related losses are mounting, and weather events are becoming more frequent and severe.

Fortunately, this has prompted many countries and companies, including my own, to commit to becoming greener. AXA XL, for instance, boosted its Carbon Management Strategy which aims to accelerate its contribution to the transition towards a more sustainable and less carbon-intensive economy by 2050.

Climate change will continue to dominate the conversation going into 2021 and beyond but there are also other areas of concern. Environmental issues are impacting the health and well-being of millions of people annually, and the sources are somewhat surprising.

We have identified four main areas of concern that we believe will be of primary concern in the years ahead. While not the only areas of concern for businesses and the insurance industry going forward, these exposures are presenting some unique liability challenges for both businesses and communities across the globe.

More Frequent, Severe Weather
Extreme weather is becoming more of the norm, bringing greater risk of wildfires, tornado, flood and windstorms. According the World Economic Forum’s annual Global Risk Report 2020, the last five years are expected to be the warmest on record, and that may be why natural disasters are becoming more intense, more frequent. These severe weather events can have some severe environmental repercussions. In their wake, damaged buildings, construction sites, infrastructures, containment systems, etc. can result in the release of all kinds of potential pollutants – pool chemicals, pesticides, fuel oil, animal waste, and more.

Consider the pollution incidents that resulted after Hurricane Harvey in the Houston area. Making landfall as a Category 4 hurricane, Harvey hit Texas’ petrochemical industry hard. Several plants shut down, but refineries and chemical plants were damaged resulting in chemical and petroleum releases.

In another potential scenario, if containment at contaminated sites that are under remediation is breached during a Nat Cat, pollution can spread, resulting in additional cleanup costs and environmental liability exposure.

The liability: Polluters pay. That’s the legal precedent set by many environmental liability claims over the decades. When pollution is discovered, the first step is to determine who is liable, to pinpoint contamination to source or multiple sources. If the source of the pollution can be pinpointed to one source, cleanup costs falls solely on their shoulders. If traced to multiple sources, those multiple parties can find themselves in litigation to determine their share of liability and cleanup expenses. If the source of contamination cannot be clearly pinpointed, nearby parties can find themselves picked as a potential source and will have to prove. For instance, floods can affect a wide area and may disrupt normal drainage systems and can often overwhelm sewer systems. Hence, sewage spills are common in flooded area. As mentioned earlier, in severe flooding, destruction of buildings that can contain a large array of toxic materials such as paints, pesticides, gasoline, can result in a release of these materials into the local environment that will need to be cleaned up.

These severe weather events can have some severe environmental repercussions.

Domestic and ‘forever’ Chemical Contaminants
In 2018, in a well-publicized case, a jury determined that a chemical in a popular weed killer had caused the plaintiff’s non-Hodgkin’s lymphoma resulting in a $289 million judgement. At issue was the chemical glyphosate, a strong herbicide that is sold globally in over 160 countries every year.

In appeals, the 2018 judgement was reduced to $78.5 million, but the decision set precedent and has paved the way for more litigation.

In addition to domestic chemicals, more attention is being paid to PFAS chemicals also referred to as “forever chemicals.” PFAS include approximately 5,000 different varieties of synthetic chemicals that do not break down and can accumulate in the environment and the human body over time.

In regular use since the 1940s when they were introduced, PFAS chemicals are still in use today. They can be found in household goods, including nonstick cookware, cleaning products, and water-repellant fabrics, as well as in packaging paper, rubber, plastics, and firefighting foam. While they are no longer manufactured in the US, they are still distributed in these and other imported goods.
(Read more from our Risk Consulting Team: What Lies Beneath: The slippery consequences of non-stick chemicals)

The liability: For companies, the exposure stemming from glyphosates could be a wider net than it first appears. Companies using glyphosate, such as lawn services, agricultural operations, could have a direct exposure to damages related to the use of the chemical.

Yet companies that sell or distribute products containing glyphosate as well as products that are contaminated with glyphosate could also have a significant exposure. Agricultural operations could have contamination from overspray from neighboring operations.

To mitigate, companies should review practices and suppliers regularly, and should have contract language that requires notification of any accidental or intentional use of glyphosates within any facet of a supplier’s operations.

Airborne Disease
It was July 1976 when men began dying suddenly, believed to have suffered from heart attacks. The men were from various locations, so there was little suspicion as to the cause of death. However, three of the victims were patients of the same doctor, who noticed they had all attended the same convention. The doctor alerted the Pennsylvania Department of Health, which began investigating the site where the convention was held in Philadelphia.

Six months and an exhaustive investigation later, the US Centers for Disease Control (CDC) located the bacteria that had caused the deaths of 29 of the 182 people who had attended or had been associated with the hotel and that convention. Having developed in the cooling towers of the air conditioning system, the Legionella bacterium had been identified and named.

Fast forward to 2018, where the CDC reported 9,933 cases of Legionellosis, which includes Legionnaires’ disease and a related disease, Pontiac fever. That total is a record increase in the number of cases annually. The National Academies of Sciences, Engineering, and Medicine estimate that 52,000 to 70,000 Americans contract Legionnaires’ disease each year.

The liability: Because it breeds in stagnant water, the Legionella bacteria can be found in pools, hot tubs, saunas, old pipe, and nearly anywhere there is standing water that falls within 68 to 122 degrees Fahrenheit. One study pointed to windshield washer fluid as one potential breeding ground.

To reduce the risk of bacteria growth, keep water temperatures in any water feature above or below the 68-122-degree range. Disinfect equipment and water lines regularly. Treat pool and spa water with chlorination or other treatment methods. Also, companies should have a water safety plan that includes regular maintenance of pipes and water circulation systems, pools and spas, and systems that use water to heat or cool. 
(Read more in our Fast Fast Forward article - A potential side effect of the shutdown: Legionella)

Probably the most prevalent, insidious issue that companies will face in the next decade is an issue that has already caused serious concerns and costly claims. Water damage, condensation, even the use of humidifiers can be breeding grounds for mold.

Mold-related illnesses are an ongoing liability that will continue to impact companies in nearly every industry. Illnesses caused or exacerbated by mold include mold-induced asthma, sinusitis, bronchial issues, skin rashes, and lung disorders.

Such mold-related health issues can be costly for companies. A jury San Diego awarded a military family $2 million for mold-related illnesses in a military housing facility. Another family was awarded over $2.7 million from a landlord who was found negligent in a mold case involving the family’s apartment.

The liability: The key to controlling mold in your company’s buildings or operations is to control moisture. Companies should do site assessments to identify potential areas of concern. Inspect roofs, HVAC systems, pipes, drainage, and airflow in closed spaces, such as restrooms and shower facilities. Ensure that areas exposed to water leaks or heavy moisture are properly ventilated. Change filters on water, air, and heating units regularly.

Also, make regular checks of and repairs to roofs, gutters, drains and any areas where water can collect. Work with your insurer to develop a mold prevention process, and to review your current insurance policy to make sure you have appropriate coverage.
(Read Start me up; Managing the environmental challenges of idle facilities)

Facing 2021 and Beyond Safely
With the rising threat of environmental risks poised to challenge companies throughout the next decade, preparation is key to mitigation. Understanding your company’s potential exposure to each of these issues is the first step to building a sound mitigation strategy.

Partner with an insurer that has expertise in mold-related exposures, and that can help you put together a comprehensive approach to preventing risks and remediating damages quickly and effectively. Having a prevention and response strategy in place can ensure that your business can address tomorrow’s risks today.


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Global Asset Protection Services, LLC, and its affiliates (“AXA XL Risk Consulting”) provides risk assessment reports and other loss prevention services, as requested. This document shall not be construed as indicating the existence or availability under any policy of coverage for any particular type of loss or damage. AXA XL Risk. We specifically disclaim any warranty or representation that compliance with any advice or recommendation in any publication will make a facility or operation safe or healthful, or put it in compliance with any standard, code, law, rule or regulation. Save where expressly agreed in writing, AXA XL Risk Consulting and its related and affiliated companies disclaim all liability for loss or damage suffered by any party arising out of or in connection with this publication, including indirect or consequential loss or damage, howsoever arising. Any party who chooses to rely in any way on the contents of this document does so at their own risk.

US- and Canada-Issued Insurance Policies

In the US, the AXA XL insurance companies are: AXA Insurance Company, Catlin Insurance Company, Inc., Greenwich Insurance Company, Indian Harbor Insurance Company, XL Insurance America, Inc., XL Specialty Insurance Company and T.H.E. Insurance Company. In Canada, coverages are underwritten by XL Specialty Insurance Company - Canadian Branch and AXA Insurance Company - Canadian branch. Coverages may also be underwritten by Lloyd’s Syndicate #2003. Coverages underwritten by Lloyd’s Syndicate #2003 are placed on behalf of the member of Syndicate #2003 by Catlin Canada Inc. Lloyd’s ratings are independent of AXA XL.
US domiciled insurance policies can be written by the following AXA XL surplus lines insurers: XL Catlin Insurance Company UK Limited, Syndicates managed by Catlin Underwriting Agencies Limited and Indian Harbor Insurance Company. Enquires from US residents should be directed to a local insurance agent or broker permitted to write business in the relevant state.