Top superfund opponent to update insurers
With news that Superfund reform is alive and well in Washington, the Bermuda Insurance Institute is set to host Chubb Corporation President, Mr. Dick Smith, at a luncheon at the end of the month, to provide a Superfund update and its implications for the Bermuda market.
Mr. Smith is currently chairman of the American Insurance Association's special committee on Superfund legislation, having been with the committee since September 1989.
Few argue with him when his statement: "Liability for clean-up is assigned under a prescription that has in fact generated far more litigation than it has cleaning up.'' He added: "Clearly, the liability system created by this law has failed.
Instead of identifying polluters, it has identified untold avenues for escaping responsibility.'' The Comprehensive Environmental Response, Compensation and Liability Act 1980 (CERCLA), enacted by the US Congress and known as Superfund, emerged over the controversy and concern over the contaminated Love Canal in New York, and other areas where it was determined in the late 1970s that mindless dumping of toxic waste was having serious environmental consequences.
The Love Canal issue was a key wake-up call to environmentalism for many in the western world.
However, while Superfund was seen as a panacea for a short term problem, resolving environmental hazards efficiently and making the polluters pay, the programme has been shown to be glaringly deficient.
Superfund was designed to empower the US Environmental Protection Agency (EPA) to identify and force clean-up of their country's worst hazardous waste sites.
But the number of sites grew significantly (2,400 EPA initiated emergency clean-up operations) and the programme itself has been blamed for the slowness of action, astronomical costs and the creation of a legal quagmire that has diverted much of the clean-up money to litigation costs.
One of the key areas involves liability. Superfund was supposed to make those responsible pay, by exposing the liability of everyone from the polluters to the insurance companies and get their money to help pay the clean-up costs, without costly and time-consuming litigation.
A serious issue here is the legislated provision for retroactive liability, requiring funding for the clean up of sites that were contaminated years before there were any laws that were being broken.
There are delays caused by the fact that courts often lack the expertise to decide on the required standards for a clean up operation. There is also a question over problems associated with how Superfund is administered.
There is also an issue of financing the increasingly expensive operations, usually paid for by responsible parties who either agree or who are forced to pay clean up costs. There are also tax payments from different sources to the Hazardous Substances Trust Fund, a pool of money that is collected to help defer clean up expenses.
The US Congress is required to re-authorise Superfund by September. Insurance companies here and abroad have been considering their exposure to required hazardous clean-up costs.
Mr. Smith, in discussing how the whole Superfund issue affects the local market, is also expected to give a broad update on recent developments.