There is no doubt that the cleanup work in the Gulf of Mexico will continue for months if not years and there are numerous businesses that are providing workers and/or equipment to help in the process. This posting serves to explain some of the issues in properly insuring these workers. I will break this down into Shoreline and Offshore/Vessel Based work.
There are a limited number of carriers willing to look this exposure right now, especially for new clients and the approach can be different by carrier; most are rating all the shoreside exposure as Longshore (USL&H) and thus adding the appropriate Longshore class codes and endorsement to their policies.
In so far as classifications being used, again some will be different by carrier, the most common seem to be:
• 9402F - Cleaning rocks, sand or wildlife on the beach: rated as street cleaning
• 8602F Taking water or soil samples from the marshlands or the shoreline of the Gulf of Mexico (not from a boat) Geological Scout.
• Any other work to clean up after the oil spill: Use the class code that describes the work performed with the F surcharge added.
However be aware of multistate exposures, many of the carrier who can write this exposure are state specific carriers and their policies DO NOT AND CANNOT provide Longshore Insurance coverage in neighboring states.. So that cleanup worker working fully covered in Louisiana today, will work without coverage if they move to Mississippi tomorrow if with one of these carriers.
We would also STRONGLY recommend adding Outer Continental Shelf Lands Act (OCSLA) endorsement to ALL these operations.
Work on/from vessels introduces another set of complications and need to be subdivided again into whether the vessels from are owned or chartered to their employer or not.
It is important here to remember that to qualify under Maritime Law (Jones Act etc) the employee must spend a “significant” portion of their time working from a vessel – the rule of thumb for most underwrites is 25%. Under that amount they will probably be considered Longshoreman. Nevertheless they should still be insured under P&I or MEL if only for defense costs.
Coverage here would be under the crew part of the vessels Protection and Indemnity (P&I) policy and should be added to this. Some underwriters may be reluctant to add this high hazard exposure and in that case you can look at either moving the Hull/P&I to someone who will OR simply using a separate MEL policy (see next section) to cover that part of the exposure.
OTHER PEOPLES VESSELS
This is typically covered under a Maritime Employers Liability (MEL) policy.
Some carriers can add the MEL to the WC/Longshore policy, but if you do that make sure the limit is $1mil as basic MEL only offers $25,000.
Alternately you can look at a monoline MEL policy, there you are often looking at a $25,000 minimum premium, a $10,000 or $25,000 deductible and a $1mil limit.For more information on MEL go to http://www.longshoretoolbox.com/Files/What_is_MEL.pdf
OTHER UNDERWRITING ISSUES• Clearly risks with a track history with the carrier OR in oil cleanup work (even if land based) are going to be much more acceptable. Build the credibility of your client with their detailed experience and background in cleanup work.
• Do not forget to add the MEL or P&I to your excess/umbrella coverage – the primary is likely to give you only $1mil limit.
• Occupational Disease is likely to be an issue for most underwriters and details of precautions taken might help. There have already been many reports of cleanup workers being taken to the hospital from this spill with a variety of symptoms and the litigation after the Exxon Valdiz spill went on for years.
• Contract details.. Most underwriters will want to see the details or headers in the contract under which they will be working… Who will they be contracting for? How long is the contract? Specific contractual requirements? Everyone understands that these contracts will probably be changed, renewed or extended, but clients without any contracts to offer will have a hard time obtaining coverage.
• What is the training/HAZMAT certification of the employees
• Do they have a drug free and safety program?
• Are the employees doing this work new hires? If so, what screening is there to ensure they can perform this long, hot, difficult work?
• If they are doing any vessel based work include details and sizes of the vessels from which they will work.
Clearly, the business that are new into this exposure will have to show more detailed plans to be successful in obtaining quality coverage from this limited market; even those with experience will need to build the detail. There is no question that this is high hazard work and proper affordable coverage is, in this case, more than ever built on quality, detailed submissions.