Nationwide Insurance continues avoiding shale gas fracking risks

Nationwide Insurance continues avoiding shale gas fracking risks by Robert Magyar, July 16, 2012, examiner
5th largest insurance provider will not underwrite fracking risks
This past Friday, Nationwide Insurance issued a release stating, “Nationwide’s personal and commercial lines insurance policies were not designed to provide coverage for any fracking-related risks.” The release further stated, “From an underwriting standpoint, we do not have a comfort level with the unique risks associated with the fracking process to provide coverage at a reasonable price.”

Nationwide’s release also comes at a time when industry leader Chesapeake Energy is under Department of Justice investigation for possible price fixing of land leases with EnCana Corporation of Canada.

Given the vast and complex federal and state regulations which governs the insurance industry, Nationwide is most likely one of the more conservative firms with an army of analysts, acturaries and lawyers all highly skilled in risk management and mitigation. Such skill sets speak to their ability to have survived and prospered for the better part of 90 years.

At a time when many insurers are facing increased payouts due to weather related damage, it will interesting to watch how the industry evolves on the fracking risk mitigation issue. Despite the ongoing claims anything and everything shale gas is all good by the industry, month over month, the evidence seems to be continuing to stack up to the contrary.

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