State official urges greater insurance against oil spills

State official urges greater insurance against oil spills | Insurance Business America

State official urges greater insurance against oil spills
New York Comptroller Thomas DiNapoli of the Oil Spill Fund sent a letter to the U.S. Transportation Department and the Federal Railroad Administration Tuesday, urging them to improve upon safety measures against oil spills. He also asked for trains to be required to carry adequate insurance for cleanup costs should they get into accidents.

DiNapoli cited a U.S. Transportation Department finding that oil shippers and rail companies have insurance policies that do not cover accidents that involve tankers carrying crude oil or similar other harmful substances.

He also quoted a part of the 2014 Securities and Exchange Commission filings, revealing that carrier CSX Corp. was self-insured for $25 million for “non-catastrophic” property damage and $50 million for natural catastrophes. Canadian Pacific Railway’s filings, on the other hand, did not have similar information on insurance coverage.

Both companies are major carriers in New York with “tankers often containing highly volatile oil with high levels of natural gas that pass through many communities and alongside major waterways, including the Hudson and Mohawk rivers, Lake Erie and Lake Champlain,” the Democrat & Chronicle reported.

“The increased volume of crude oil transported by rail in recent years increases the potential for catastrophic accidents,” DiNapoli stated in his letter. He then mentioned the derailment that occurred in Quebec 2013 wherein $2.7 billion worth of damage was caused; the accident took the lives of 47 people and drove the Montreal, Maine and Atlantic Railway into bankruptcy, as it was only insured for $25 million.

According to DiNapoli, the Oil Spill Fund department has projected 10 oil train accidents of “higher consequence” within the next 20 years, with costs over $1.15 billion in each case, up to a maximum of $5.75 billion.

While he recognized recent safety improvements both federal and state authorities have enforced—such as more safety inspections and enhanced equipment and crew standards—DiNapoli called for more measures, such as restricting the speed of oil trains in more municipalities and redirecting them around population centers when possible.

Spokespeople from both companies have responded to DiNapoli, assuring him that they are adequately insured.