By R. Ivy Riggs, CPCU, ASLI, AIS
Executive Underwriter, PartnerOne Environmental

One of the most widely misunderstood features of an environmental insurance policy is the definition of pollutant (or in some cases pollution condition).  For some, the confusion arises from a historical viewpoint that tends to interpret this term along traditional lines to mean an industrial byproduct or hazardous waste. For others, although they may know that coverage has broadened significantly over the past 25+ years, they may not be aware of just how many different versions of this term there are in the current E&S marketplace. Either position can be one of weakness in a competitive situation.

Further compounding this complexity is the fact that technologies have advanced over the past few decades in ways that could not have been foreseen when the first Pollution Liability policies were written in the late 1970’s. Most notably in the field of biotechnology, new discoveries have brought—or soon will bring—to market a host of products whose impacts on the natural world may not be fully understood until long after their release. These include genetically modified organisms (GMOs), transgenic organisms, and even synthetic organisms. Before we explore the implications of these developments further, let’s revisit the distinctions that make these products unique.

What they all share in common is genetic material that has been altered by human intervention.  Unlike the practices of selective breeding and artificial selection that have characterized human domestication of plants and animals for millennia, the interventions that characterize modern biotechnology are fundamentally different. GMOs have had their DNA modified through the insertion, deletion, or mutation of their native genetic material. Transgenic organisms are a subset of GMOs; their genetic makeup has been altered by the introduction of genetic materials from an unrelated organism.  Synthetic organisms are cutting edge enough that no clear consensus has yet emerged on what is meant by this term, but one point is clear: with new-found abilities add “letters” to the genetic code and to create mirror-image double-helix DNA structures that have never existed in nature, humans are poised to invent truly new life forms.

The implications are potentially staggering. For the cheerleaders of these developments, they may promise new medical treatments, improved food supplies, or possibly even the ability to re-create and reintroduce species that have long been declared extinct. For those who have perhaps seen Jurassic Park one too many times, the promise may not seem to outweigh the potential peril.

But what does this have to do with environmental insurance? First, consider that many policies have been broadened to include naturally-occurring microorganisms (like bacteria and fungi) within their definition of pollutant. Others have gone farther by including viruses and/or allergens. Still others precede their list of covered pollutants with the very broad language “including but not limited to,” suggesting that any contaminant might potentially be covered if it is not otherwise specifically excluded under the terms of the policy.

Second, remember that in those cases where naturally-occurring contaminants (e.g., radon, asbestos, mold) are included in the definition of pollutants, coverage is not guaranteed. Usually it will not respond unless they are found “in amounts, concentrations or levels in excess of those naturally present in the environment.” But for GMOs, transgenic, or synthetic organisms, none of them are naturally present in the environment. They are no less an anthropogenic creation than PCBs or CFCs or many other inventions that were promised to improve human life.

The point to keep in mind is that these products—and the liabilities associated with them—are not arriving in a far distant future. They are here. Now. And they will continue to multiply. As the pace of these advancements quickens on the global stage, it is essential to keep up with the latest developments or partner with those who do. Without a clear understanding of the new class of risks presented and the possible solutions available to address them, one can unwittingly leave both their clients and themselves vulnerable.