|Contact: Gene Guilford email@example.com or Chris Herb firstname.lastname@example.org|
|For Immediate Release June 21, 2012|
TANK INSURER LEAVING - IMPERILS CT GAS STATION OWNERS
[Cromwell, CT] The Independent Connecticut Petroleum Association, representing the majority of the state's 1,400 retail motor fuels outlets that sell gasoline and diesel fuel, reiterated that one of the world's largest commercial insurers of underground storage tanks and gasoline stations, Zurich, is leaving the UST insurance business - causing a problem for Connecticut's gas station owners who must buy insurance after October 1st by virtue of an action of the legislature at the recently completed general session.
Zurich, and companies like it, provide "wrap-around" coverage to UST owners in states that have state-held UST funds, like Connecticut. In states where no state-held funds existed, Zurich provided insurance but not necessarily to every station that needed it. Insurers provide coverage where station properties are relatively free of any contamination - and station owners find it extremely difficult to buy insurance where contamination exists.
Since 2010, ICPA has attempted to work with CT-DEEP and the Connecticut General Assembly on fashioning legislation to repair the damage done to the Connecticut Commercial Tank Fund by years of prior legislature's having raided the fund of its resources. That raiding left a backlog of expenses to the fund approaching $100 million. This insurance fund, created in 1989, takes the place of non-existent commercial insurance policies that are required by federal law to be in place on all underground storage tanks. The petroleum gross receipts tax was enacted to fund this program, starting more than twenty years ago at 1% of the wholesale price of gasoline - now at 7.53% of that cost and going over 8% in July of 2013. Over $300 million a year is collected from this tax - and the Tank Fund was suppose to receive around $15 million per year.
Unfortunately, CT DEEP mistakenly believed that commercial insurance is available to deal with the insurance exposures on USTs - leading CT DEEP to tell the General Assembly that the Commercial Tank Fund program could be eliminated, effective October 1, 2012. One more bit of incontrovertible evidence that CT DEEP was wrong is the news that the nation's largest commercial insurance provider to UST owners is leaving the market and will no longer provide any coverage.
If gas stations cannot buy insurance - then under federal law they cannot legally operate and will need to close.
ICPA warned CT DEEP and the General Assembly of this, and the temporary repair enacted during the special session will now have to be regarded as a down payment on what is clearly a far larger problem to be revisited in January with the new General Assembly.
Leading Tank Insurer Calls It Quits
In blow to marketers, Zurich American will no longer issue UST insurance, renewals
CSP Daily News |
WASHINGTON -- In what will be a major blow to marketers, a large insurer of underground tanks in the United States will no longer issue new underground storage tank (UST) insurance or renew existing coverage, CSP Daily News has learned.
A top U.S. Environmental Protection Agency (EPA) official delivered the news of the decision by Zurich American Insurance to quit the market in a June 18 memo to industry groups and state tank fund administrators, a Raymond James/CSP Daily News Flash reported late yesterday.
"Because Zurich has been one of the major national UST insurance providers over the years, EPA is aware that many UST owners and operators across the United States have used Zurich's UST insurance policies to provide coverage against corrective actions and third-party damages," wrote Carolyn Hoskinson, director of the agency' Office of USTs.
The EPA memo, a copy of which has been obtained by CSP Daily News, gives no reason for Schaumburg, Ill.-based Zurich American's decision to quit the market.
"I assume it's because their claims are exceeding premium revenues," said one marketer attorney with several clients who are currently insured by Zurich. "A lot of people depend on Zurich. I think we're entering a period where it will be tougher for folks to get tank insurance. "
The problems for marketers will be compounded by the sorry financial situation of many state tank funds. Legislators have raided funds to ease state budget squeezes and some funds are on the verge of extinction. EPA regulations require that fuel marketers and tank-owners have insurance or can provide proof of their ability to pay for leak cleanups if a spill occurs.
"If you're one of them, and you are now converting to a new policy, now would be a great time to read it carefully and ensure you have the coverage that you need," Hoskinson said.
ICPA represents more than 576 Connecticut based independent businesses. These businesses serve more than 680,000 heating fuels consumers, employ 13,000 Connecticut citizens at the majority of our state's 1,400 motor fuels outlets and 600 heating fuels retailers. ICPA's offices are at 10 Alcap Ridge, Cromwell, CT 06416.
For more information about today's Press Release, contact Gene Guilford or Chris Herb.