Source: https://www.insurancebusinessmag.com, November 14, 2018
by: Bethan Moorcraft
A “cluster” of legionnaires’ disease cases in September left at least seven people hospitalized with pneumonia-like symptoms in the Guildford area of Surrey, British Columbia. Fraser Health Authority confirmed the “cluster” of cases on Saturday, September 01, and immediately began an investigation.
Legionnaires’ disease is a serious respiratory illness that results in pneumonia. It’s caused by the bacteria legionella, which is commonly found in freshwater, groundwater, and soil. Legionella can also spread in human-made water systems like cooling towers, hot tubs, fountains and large plumbing systems. When water contaminated with larger quantities of the bacteria is released into air in the form of droplets or mist, people may be exposed to the bacteria by breathing in contaminated air.
The risk of getting legionnaires’ disease is generally quite low. It’s normally elderly people, smokers, or people with weakened immune systems that are most vulnerable to contracting the disease. The rare nature of legionnaires’ disease is what made September’s uncommon “cluster” in BC even more interesting.
With seven cases under investigation by the Fraser Health Authority, a local Walmart in Guildford Town Centre mall in Surrey, BC, chose to close voluntarily on Friday, September 07, after legionella bacteria was identified in the store’s cooling towers. The store, which wasn’t identified as the source of the outbreak at that time, reopened after a day but was responsive to Fraser Health’s recommendations to close its cooling towers, conduct deep cleans and remediation, and carry out continued testing.
Walmart’s commercial action and potential business income and interruption losses highlight the value of environmental liability insurance coverage. What a lot of people don’t realize, according to Beazley Canada environmental underwriter Miles Foxworth, is that mold and bacterium like legionella are considered environmental pollutants and are often excluded on general liability and property insurance policies. However, pollutants are covered under environmental liability insurance policies – something Canadians are slowly picking up on, if the uptick in pollution claims is anything to go by.
“There seems to have been a high uptick in mold claims in Canada over the past few years. I think partially that’s people realizing they can get coverage on their pollution policy. The other factor is that large portfolios – hotels, hospitals, real estate, etc. – are starting to realize that the cost of cleaning up mold and bacterium can be astronomical,” Foxworth told Insurance Business.
“One leak in the roof of a high-rise building or a condo can lead to the property owner having to replace the dry wall and flooring on every single floor, which can result in multiple millions of dollars worth of damages. Mold and bacterium can result in astronomical costs that insureds often don’t often associate with environmental liability insurance coverage.”
As cases like the recent BC legionnaires’ outbreak hit the headlines, more and more Canadians are becoming attuned to their potential environmental exposures, according to Matt O’Malley, head of North America Environmental at XL Catlin. This is driving “significant growth” in the environmental insurance market in Canada, but there’s still more education work to be done because environmental exposures are constantly evolving, he added.
“Vapor intrusion [potentially carrying legionella] is one thing that could impact a property owner,” said O’Malley. “What property owners may not realize is that they could be held liable if vapor intrusion from an adjacent property has compromised the environment in their own building. Environmental law contains strict liability clauses, so it’s important for people to become more educated on the types of environmental liability issues they could face. Oftentimes, when an insured has an environmental claim, it’s the first time they’ve faced a claim of that nature, and the litigation can be quite daunting.”
Both Foxworth and O’Malley pointed out that insurance brokers have a really important consultative and advisory position when it comes to educating insureds about the benefits of standalone environmental liability insurance policies and how to mitigate environmental exposures. They agreed that the uptick in environmental claims shows brokers are succeeding in that education play, because it means more insureds understand what they’re covered for under an environmental liability insurance policy.
However, environmental liability is constantly evolving. Foxworth commented: “Over the years, the pollution policy has become a catch all for things everyone else has pulled out of as environmental liability has evolved. As insurers continue to exclude exposures from property and general liability policies, the environmental liability policy is taking them on. The definition on a pollution policy is so broad that essentially it covers anything that’s released or exists in a place where it shouldn’t naturally be.”
Chris Dockery, senior vice president at US-based Brown & Riding Insurance Services concurred: “As for trends or what the next environmental exposure might be – who knows? 15-20 years-ago, mold, lead, asbestos and legionella were not considered issues, but now they’re common exclusions on standard insurance policies.”