Five emerging trends in environmental claims, including cost reduction strategies, application of technology, crossover of environmental services to standard forensic claims, third party claims, and vapor intrusion.

The tiny pinhole in the pipe elbow probably took more than twenty years to form and cause a leak, a day or two to be discovered, and less than an hour to be repaired. This recent claim involving corrosion of a pipe elbow on a home heating oil tank resulted in a very minor release of a few gallons of heating oil to the surrounding surface soil. The insured acted appropriately, the release was quickly investigated and repaired. Based on the size of the tank and volume of the release, state regulations did not apply; however, local regulators became concerned over the possibility of impact to shallow groundwater in the area. Although the shallow aquifer was not considered a source of drinking water, it was used extensively for irrigation. Furthermore, the property owner soon began to notice petroleum like odors inside the home/office necessitating relocation for a couple of days. After the repair of the leak, the situation was completely resolved in a few weeks with the excavation and removal of impacted soil from beneath a patio and a portion of the building adjoining the point of release. Fortunately, the release was discovered early, quickly repaired, and the volume of the spill was not sufficient to impact groundwater, which could have easily transported contaminants and associated vapors well beyond the boundaries of the insured's property.

The type of loss presented above is a fairly typical residential environmental claim. Years ago, this claim may have been settled as a mechanical issue with less focus on the longer term environmental contamination considerations, regulatory impact and vapor intrusion into the home. The complicating factors to these claims have more recently been growing. Therefore, the methods used to handle environmental cases continue to progress. By the nature of this type of work, environmental issues frequently evolve due to the regulatory climate, technological advances, litigation and cost considerations. To address these changes, some trends have become apparent in recent years.

Cross Over Services - As referenced in the project above, often claims that begin as standard forensic engineering investigations are routinely incorporating an environmental component, such as soil and groundwater impacts, indoor air quality issues, along with asbestos and mold concerns.

Cost Reduction Strategies - Not surprisingly, the focus on developing cost reduction strategies to control expenditures has becoming increasingly important The insurer's handling of the claim, the role of consultants and leveraging of technology are all areas that are subject to cost control.

Application of Technology - New technology is not only used for cost reduction, but is also important in expediting claim resolution, improving the quality of an investigation and the speed of delivering information.

Third Party Claims - Innovative developments in the energy production sector and previously dismissed issues in the environmental cleanup industry have resurfaced and have produced third party claim concerns that previously were uncommon. These include vapor intrusion into occupied buildings from volatile chemicals associated with new and historical releases impacting soil and groundwater, and pollution concerns over the use of hydraulic fracturing techniques in the production of domestic natural gas.

These trends are described in more detail below.

Over the past several years, specialized consulting services and diagnostic test equipment have become increasingly necessary in the disposition of forensic engineering and fire claims. Unforeseen consequences of accidents, failures and oversights often include impacts to the environment as well as human health. Forensic engineering firms are well aware of these issues, and their changing complexities. Firms typically develop multidisciplinary teams of environmental consultants to support their cases. These teams may include environmental scientists, geologists, microbiologists, chemists, building scientists, and indoor air quality specialists. Team members are trained to work along side the forensic engineers and fire investigators in providing diverse consulting services such as historic document reviews, desktop soil and groundwater evaluations, regulatory reviews, asbestos, lead-based paint, indoor air quality testing, water penetration testing and other related services. While supplemental services are not required on every project, each of these services can play a vital role in defining and understanding the risks associated with a claim, and the value of an appropriate remedy.

Perhaps the most effective use of both traditional and multidisciplinary support resources working together is as a follow-up to emergency response. After an emergency is abated and emotions are calm is the best time to develop a rational and cohesive approach to addressing both the cause of the emergency and the most cost effective, practical course of action for both the insurer and the insured. For example, the immediate goal of the fire fighter's response to a small kitchen fire is to save lives, extinguish the fire and insure that it stays out. Incidental water infiltration into other adjacent areas of the building is a collateral issue that will result in fungal growth in 24-48 hours, bringing its own set of concerns. Asbestos containing building materials along with volatile and semi-volatile organics and particulates associated with incomplete combustion may also remain and pose a real or perceived threat to occupants during the cleanup and restoration phase of the project. While this may appear to be a fire loss requiring origin and cause investigation, the insurer would clearly be best served by having access to a multidisciplinary team of experienced engineering and environmental consultants working on the insurer's behalf to fully define, understand and address risks in an appropriate and defensible manner.

Cost Reduction Strategies

There are many strategies currently employed to impact the cost of processing a claim. One primary strategy has been for insurers to utilize a clearinghouse approach to processing environmental claims by funneling them through environmental centers. These centers are staffed with adjusters possessing specialized environmental experience. As mentioned above, consulting firms often form multidisciplinary teams and appoint a single point of contact to meet the specific needs of the case on behalf of the insurer. Forensic consulting services may range from a routine desktop review by a single consultant, to a comprehensive third party review and extensive data verification involving several individuals. These practices should help better define and evaluate the risks, correctly focus the investigation and reduce the amount of time dealing with the issue.

Often, a brief desktop review of readily available information provided by the engineer or adjuster can help understand the risks and evaluate the appropriateness of a remedy at a very reasonable cost. As an example, consider this scenario: Following emergency response activities addressing the release of a hundred gallons of diesel fuel from an above ground storage tank at a remote construction site, the remediation contractor excavated 25 yards of impacted soil. Soil samples obtained and tested from the excavation indicated elevated concentrations of diesel were still present at depths of 1-2 feet; consequently the contractor proposed additional limited excavation in the impacted areas with subsequent retesting. In this case, a desktop review of the available site photographs, test data, regulatory cleanup levels, and local soil profile, topography and geology, in addition to telephone interviews with the on-site contractor and regulatory authority, would likely yield sufficient information to evaluate the contractor's recommendation and provide the insurer with adequate oversight at a reasonable cost. Of course, even this simple scenario has several variables and cannot be universally applied. The type and quantity of material released, local soil and groundwater conditions, the absence or presence of nearby sensitive receptors, concurrent health and safety issues, local environmental regulations, or the likelihood of litigation could warrant another approach and greater consultant involvement.

Application of Technology

In addition, use of time saving technologies such as ground penetrating radar, infrared thermography, high resolution aerial photography, and wireless access to remote databases and other information can provide answers quickly and cost effectively, especially when used in conjunction with short form reports and web-based report delivery methods. For example, water intrusion evaluations can be expedited with the assistance of an infrared camera. A trained operator can easily and quickly identify areas of moisture, which traditionally required detailed and time consuming moisture mapping techniques and even destructive testing. In less than half the time, areas of moisture can be imaged, mapped and confirmed with moisture measurements. Select infrared cameras are capable of receiving data from moisture meters and other field devices via Bluetooth™ wireless communication. Moisture measurements can then be sent to the infrared camera for inclusion on their respective thermal images. This information can be processed into a useable report, and often delivered the same day using a WiFi mobile device.

Third Party Claims

Third party claims and environmental issues go hand in hand. Two developing areas of potential exposure to third party claims are vapor intrusion in buildings and hydraulic fracturing in natural gas production. Gaseous emissions of volatile chemicals from contaminated soil and groundwater have the potential to migrate into overlying buildings. These vapor emissions tend to move towards areas of lower chemical concentrations by diffusion and lower pressures by advection. Pressures inside buildings are influenced by changes in atmospheric pressure, wind flowing over and around the building, internal and external temperature changes, and building ventilation equipment. These differences in pressure inside a building draw vapors inside through basement or foundation cracks and other penetrations, creating a potential health hazard to building occupants. While considered only a minor environmental concern for years, regulatory agencies throughout the country have reopened "closed" soil and groundwater pollution cases to reevaluate them for current on and off-site risks associated with vapor intrusion. While some believe that the risks are often exaggerated, the threat of serious health concerns to occupants is now considered real. Further, the perception of risk can be a powerful force. As a result, vapor intrusion is fertile ground for lawsuits involving those parties responsible for both new and historical contamination, commercial building owners, construction contractors and others.

In the late 1940's, hydraulic fracturing was first used to enhance gas production in rock formations. Recently, techniques have changed drastically and created an exploration "boom" in the Northeast and areas of Texas. Using this process, a company may drill a well several thousand feet deep and then turn horizontally through a shale formation for a great distance. Drillers pump millions of gallons of water under high pressure to fracture the shale and release trapped gas. A key concern is the fact that the water is mixed with sand and chemicals, some known carcinogens, which could impact surrounding property and water supplies. In addition, the infiltration/migration of natural gas into drinking water is also being investigated. The impacts on adjacent property and water supplies are currently being evaluated and litigation is forcing more transparency and innovation in the process. The success in production and the extent the method is used will continue to increase claim activity and will evolve greatly over the next several years.

Conclusions

The need for environmental consulting services requiring specialized training and consulting expertise has steadily increased in response to regulatory changes, public awareness and litigation. As an outgrowth of traditional forensic investigations, environmental issues often arise and typically require quick and cost effective resolution. The use of multidisciplinary teams and the application of new technologies that enhance reporting quality and speed have become increasingly necessary. Public awareness of environmental issues continues to grow, increasing the likelihood of third party claims. Forensic engineering firms are responding to these trends by expanding their environmental capabilities to quickly and effectively define current and emerging risks so insurers can efficiently address these claims on behalf of their customers.