Disasters Leave a Toxic Tail

Following a natural disaster, toxic materials released by the storm waters wreak havoc on the environment and public health.
By: | April 9, 2018 • 5 min read

The year 2017 was a bad year for named storms. Hurricanes Harvey, Irma and Maria caused widespread property damage and loss of life. While refineries and chemical plants were secured, pollution and contamination from agricultural and pool chemicals as well as fuels and lubricants could be seen far and wide.


“Since the Murphy Oil release during Hurricane Katrina, heavy industrial facilities at risk have developed stronger preparedness and storm contingency plans,” said Marcel Ricciardelli, senior vice president of environmental, design, professional and surety, Allied World.

“A single major release can result in extensive damage.”

While no Murphy Oil-scaled events occurred, 2017 saw tank roof collapses, fires and explosions, air pollution releases, spills and waste site flooding. To add historical context, Hurricane Sandy, which hit in 2013, resulted in similar types of releases from flooded vehicles and underground/aboveground storage tanks.

“Major changes in building codes or government regulations would likely be needed to harden small businesses, commercial buildings, homes and vehicles,” said Ricciardelli. “The key question is whether the cost and effort would help to reduce releases significantly.”

He added, “I believe that it has been most effective to plan for worst-case scenarios, using preparation time to remove hazardous materials and to develop contingencies for critical services. Unfortunately, there is a lack of predictability with regard to weather intensity and flooding.”

Planning for Contaminants

Flooding is a broad peril with the ability to move pollution.

“Without the ability to prevent flooding, it is difficult to prevent possible contamination from flood waters,” said Ricciardelli. “Flood water can be contaminated from sewage overflows, waste sites, releases from mechanical systems, energy infrastructure and materials in the chain of commerce.”

Marcel Ricciardelli, senior vice president of environmental, design, professional and surety, Allied World

Given that reality, “property owners should understand that contingency plans should be developed to include assistance from emergency response firms and the possible use of environmental insurance as part of their risk management plan. An environmental insurance policy may provide coverage for the clean-up of pollution that migrates from off-site sources.”

Most substantial industrial facilities have management and emergency response plans in place that are required.

“For facilities with aboveground tanks, storm surges and flooding are significant concerns for tank failures,” said Eugene Wingert, environmental manager, Chubb Risk Engineering Services. “Debris generated from a storm can also damage tanks. A facility’s contingency plan should anticipate methods that protect tanks from surges, flooding or floating debris.”

“You can debate the causes, but there is no debate on the effects. We are getting greater levels of severity in weather events.” — Robert Horkovich, managing partner, Anderson Kill

Unexpected conditions can lend themselves to toxic repercussions.


“For example, in the case of the Arkema plant, the fire and environmental damages were the result of the loss of back-up generators,” Wingert noted. “The loss of power impacted the ability to cool the storage areas, and chemicals within these areas reacted at the higher temperatures.”

Speaking broadly, he added, “Conditions such as storm surge, flooding, winds are all perils that may exacerbate the release of toxic chemicals into the atmosphere causing third-party exposure, bodily injury, water-supply infiltration, air exposure and provoke the need for remediation.”

Continued disaster preparation becomes more important as climate change worsens.

“You can debate the causes, but there is no debate on the effects,” said Robert Horkovich, managing partner at the law firm of Anderson Kill. “We are getting greater levels of severity in weather events. Even in 2016, which was not a bad year for hurricanes, we saw batteries of dozens of hurricanes running through a state.”

As local officials increase their efforts and preparation, they are also looking at prevention. There has been some discussion of limiting reconstruction in flood zones, but it’s easier said than done.

“This is a complex question,” said Ricciardelli. “In many cases, individuals or companies can rebuild subject to zoning requirements or building codes. Building in a flood zone may come with increased building requirements and additional insurance costs.”

The combination of building codes and increased costs may prevent those with limited resources from rebuilding without government support.

Similarly, with new flood zones, consideration of revising drainage systems is taking place. Again, not so simple. Funding would be necessary to construct flood prevention and draining systems, and their effectiveness would be based on predictability.

“I believe that these types of systems would only be suitable for chronic flooding areas and can only handle situations within their design parameters,” said Ricciardelli.

“The damage from Hurricane Harvey, like Katrina, would likely not have been in anyone’s design parameters. The flooding from Harvey was caused, in part, by reservoir releases that were needed to prevent dam collapse.”

A Public Health Concern

One politically charged issue, long-tail health concerns, is not as much of a liability problem as it might seem; “Our environment has pollution from our industrialization,” said Ricciardelli.

“It is difficult to say whether the additional pollution released from a catastrophic weather event creates long-term effects beyond the chemicals and pollutants we add every day.”

He explained that “the air quality deteriorated after Harvey due to pollution from the industrial facilities in the Houston area. The air quality today is very similar to air quality prior to the storm. Consistent poor air quality is a public health issue. I believe it is unlikely the spike after a storm would result in a larger public health crisis in the long term.”

“It is difficult to say whether the additional pollution released from a catastrophic weather event creates long-term effects beyond the chemicals and pollutants we add every day.” —Marcel Ricciardelli, senior vice president of environmental, design, professional and surety, Allied World

A significant pollution event is easier to evaluate due to gross contamination within a finite area.


“Gross contamination is more likely to cause a public health crisis,” Ricciardelli added, “which would be handled by removing individuals from the exposure and potentially making the affected area uninhabitable for an extended period.”

Horkovich stressed the importance of business interruption insurance: “I have had cases where a client was surrounded by a moat of flood waters. There was no damage to their facility, but they were unable to operate, because they could not get raw materials in or finished goods out.

“I have many clients that are chemical and oil companies,” Horkovich continued. “My advice to them is always do what you need to do to protect your facilities and your company. You can get insurance but also make it so that no one can fault your company or your management when bad things happen.” &

Gregory DL Morris is an independent business journalist based in New York with 25 years’ experience in industry, energy, finance and transportation. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.


That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.


Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]