Fracking Insurance: Winners and Losers

Fracking Insurance: Winners and Losers by Dave Colavito, July 20, 2012, Huffingtonpost
The additional hazards associated with gas well exploration and the use of hydro-fracking techniques used in gas well[s], production and the resultant increase in infrastructure such as well pads, pipelines and roads to service the wells have increased the potential for the frequency and size of liability losses to property owners within the region. Landowners in the area have experienced land ownership and purchasing issues regarding land that is currently within, adjacent to or simply near a well or proposed well site. Lenders require the borrower to obtain and maintain insurance to protect the lenders’ interest in the event of a loss on the property. If insurance cannot be obtained lenders may claim the loan is in default or refuse new loan applications. Insurance companies are in the business of making money by mitigating financial risks for their policy holders. In order to remain in business, collective policy premiums need to exceed the collective expense of liabilities over time. That’s neither good nor bad; it just is. But such a characteristic renders it incompatible with protecting people and the environment when there isn’t money to be made. It’s a deficiency we rely on government at all levels to address. But the deficiency isn’t getting addressed, and indications from the experts I’ve talked with suggest it won’t be any time soon, if ever.

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