Environmental exposures of small businesses

Many small businesses are located near federal hazardous material sites

We rarely think of small businesses having a significant environmental exposure, with a few obvious exceptions. But we might want to reconsider that opinion based on information developed by GeoLogix Solutions, LLC, that found that 42% of small businesses (those with 99 or fewer employees) operate within one mile of a Superfund or federal CERCLIS hazardous materials site. In the Northeast, that number is around 57%. CERCLIS (the federal Comprehensive Environmental Response, Compensation and Liability Information System) is a database that includes all sites that have been nominated for investigation by the Superfund program.

The percentage of small businesses that are located within one-half mile of a federally listed hazardous site is 22%, except in the Northeast where the average is 32%.

The state with the highest percentage (78%) of small businesses within one mile of a hazardous site is Alaska, while 59% are within a half-mile. Rhode Island is next, with 70% of small businesses within a mile and 40% within a half-mile. It is followed by New Jersey, where 63% of small businesses are within one mile of a site and 37% are within a half-mile.

The problem is that the chemical toxins in these sites "have no respect for industrial site boundaries," as Robert H. Weiss, Esq., noted in his April 28, 2010 article, "Nothing Super About Superfund Sites" in Forbes magazine.

The results for the insurance industry could be hidden but would emerge as higher workers compensation, disability and health care costs as employees at these businesses are affected by the aforementioned chemical toxins. In a number of cases, higher rates of cancer and other diseases have decimated communities and businesses near the sites. In addition, proximate environmental exposures could be especially noteworthy for classes such as food processing, day care centers, and others that are reliant on ground water.

The GeoLogix data certainly should give insurers and agents pause concerning what type of coverage needs to be included for these small businesses, as well as better determination of the potential loss costs.

GeoLogix Solutions (www.geologixsolutions.com) is a market data and analytics firm specializing in insurance industry solutions serving the P&C, Life & Annuity, Health & Group Benefits marketspace through strategic alliances including one with Oxxford Information Technology. For more information, please contact GeoLogix Solutions at (860) 974-2306 or email jim@geologixsolutions.com.