ENVIRONMENTAL INSURANCE
BY: MARC LEBRUN, VICE PRESIDENT OF CONSTRUCTION AND ENVIRONMENTAL INSURANCE, ENCON GROUP INC.
Environmental Insurance:
How To Remain Calm In A Crisis
Would your organization be ready to respond to a crisis involving an escape of pollutants at or from your premises? Have you considered what impact those critical decisions would have on your business and reputation?
Often, crisis response becomes top-ofmind only after something bad happens and not before, when clearer thinking and preparation can be done. A crisis is a highstress environment where quick actions may be required. You want to be confident you will respond in a way that will protect both your business and your reputation.
Having a good crisis communications plan is an important first step to ensure your company is prepared when an environmental incident occurs. This involves creating a strategy to identify what the organization will communicate to stakeholders, including when and how the communication will be released. When a crisis strikes, the organization should be ready to do the following:
1. Assess the situation quickly and determine how to respond.
2. Demonstrate transparency by communicating details of the crisis, how it’ s being managed, and include information related to safety, responsibilities, and actions moving forward.
3. Control the narrative to prevent the spread of inaccurate information.
4. Provide great leadership.
These tasks can appear daunting; however, there are firms that specialize in crisis management. They can provide professional services to help you through the process of creating a crisis communications plan and, should the need arise, assist in its execution.
Responding to an accidental escape of pollutants can be a costly undertaking. While most environmental liability insurance products will cover the cost of cleanup and remediation, it’ s also important to have coverage for crisis management, which could include expenses for public relations services. A crisis that is managed poorly can result in serious damage to an organization’ s reputation and sales. If public confidence in the organization is diminished severely enough, it may even threaten the organization’ s ability to continue operations.
Crisis management expense coverage can be added by endorsement to existing environmental cleanup and liability insurance policies for a wide variety of organizations, including retail, manufacturing, commercial, industrial, or institutional occupancies. The endorsement should cover reasonable and necessary fees, costs, and expenses when a pollution condition results in regional or national media reports that diminish public confidence in the named insured. Here are some examples of the types of risk that could generate a costly communications crisis if not managed correctly:
1. A trailer storing barrels of oil at a manufacturing facility flips over when a support leg fails, resulting in a release of oil from the damaged barrels.
2. A piece of machinery is moved from a manufacturing plant’ s shop floor as part of a process line reorganization. A leak of hydraulic fluid is discovered emanating from the equipment and into an unsealed trench pit.
3. A manufacturer of industrial cleaning compounds experiences an accidental discharge of approximately 16,000 liters of diluted residual material from an on-site blending tank into a storm sewer and neighbouring river. +
Marc LeBrun is Vice President of Construction and Environmental Insurance at ENCON Group Inc., a managing general agent with over fifty years of experience in specialty insurance, including professional liability, commercial general liability, construction, and environmental. For more information, please visit encon. ca.
30 | SPRING 2017