Insurance news could be changing for coverage for oil-by-rail risks

Insurance news Lac Megantic train derailment
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The Canadian government is looking into broadening the burden for protection against disasters.

According to a recent insurance news announcement made by a government official in Canada, it is considering the expansion of the coverage burden for disasters occurring in crude-by-rail transportation.

It is also thinking about developing a special fund comparable to the one once established for maritime oil spills.

The insurance news could be tremendous to the industry, which continues to reel from the catastrophe that occurred when an oil train lost control and exploded in the province of Quebec in a town called Lac-Mégantic, devastating the very core of the town and killing 47 people. The costs associated with cleanup and reconstruction are currently the responsibility of municipal, provincial, and federal governments and it is currently estimated to be somewhere around US$360 million.

The federal government made insurance news last year when it said that railways would be required to carry more coverage.

Insurance news Lac Megantic train derailmentThe government stated, last year, that these rail insurance policies would be required to cover this type of disaster. However, since that time, the Conservative government has started to change its tune and has determined that it may be unrealistic to force this segment of the industry to have to take on the full extent of the cost, according to the government official who did not have the authorization to speak publicly and who has therefore remained anonymous.

Lisa Raitt, the Transport Minister in the country, declined the opportunity to be able to make a comment on this issue. She also would not confirm whether or not a fund would be set up for this purpose that would be similar to that for maritime crude transportation. What she did say was that she was considering railways and shippers in terms of additional coverage for disasters of this nature.

The press secretary for Raitt, Jana Regimbal, explained that “The taxpayer should not have to fund the cost of damages after an incident.” That said, various groups and railways have also made their own insurance news statements, saying that brokers and shippers should also carry adequate coverage, and some say that it may be vital to establish a separate fund.

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