The country is now demanding that rail vehicles transporting oil must have additional protection against spills and explosions.
According to the Transport Minister of Canada, Lisa Raitt, has made an insurance news announcement that has said that the country will be increasing the amount of coverage that railways will be required to carry when they are transporting crude oil.
Shippers will also have a levy imposed upon them in order to help to pay for the cost of major accidents.
This insurance news comes at a time in which the oil by rail industry is growing at an extremely rapid rate. Raitt revealed these changes within a bill that is, for the most part, a response to the 2013 train disaster in which there was a loss of control that ended with an explosion in the center of a village in Quebec called Lac-Megantic. Forty seven people were killed and the core of the town was flattened.
This insurance news will also increase the power of Raitt’s department in certain railway situations.
The legislation is working to boost the ability of the Ministry of Transportation to be able to step in, should it have concerns about the safety of a railway’s operations. According to Raitt, “Rail companies will be concerned about the amount of extra regulation that we may be putting in place today, but for the safety of Canadians and protecting communities it is the right way to go.”
The reason that crude has been shipped at an increasing rate by rail is that the demand for pipelines has now reached the point that it is greater than the capacity of those that have been put into place. Raitt has now placed the increasing of safety measures in a high priority position. She has also placed a focus on an attitude for accidents in which it is the polluter that pays. Naturally, this is considerable news for the insurance industry, which will be affected in terms of the coverage that will be needed in order to ensure that railway disasters are, indeed, covered.
In 2013, the insurance news from the Lac-Megantic disaster showed a cleanup cost that far exceeded the railway’s $20 million in coverage. This was far greater than the coverage held by the Montreal, Maine & Atlantic Railway, which went bankrupt as a result of the catastrophe, leaving the provincial and federal governments to pay the remainder of the bill.