While cyber risk such as the theft of personally identifiable data has been highly publicized, physical risk such as pollution sparked by cyber breach is just as real and already occurring.

1. SPECIALTY LINES INSURANCE
www.liu-usa.com
New Pathways:
How technology is
transforming environmental
insurance at digital speed.

2. The Liberty One TAP
Response App helps make
the best out of hazardous
spills by keeping companies
and key people informed
while facilitating the
best response in the
quickest amount of time.

3. The Good News
On the other hand, digital technologies are evolving and being
leveraged in positive ways like never before to help companies
reduce exposure and mitigate loss.
“When people think of environmental insurance and tech-
nology, they usually think of policy issuance and the advent
of e-signatures. But digital technologies like smart phones
coupled with geotracking – the ability to pinpoint where
someone is located – are revolutionizing spill emergency com-
munications, response times and effectiveness making a huge
difference for insureds,” Bell said.
With mobile technology such as the Liberty One TAP Re-
sponse App on their smartphones, companies can benefit from
Timely Accident Preparedness. With the tap of the app, they
can quickly report, get a response, and remediate. This allows
the clean up to start quickly and through the assistance of Spill
Center, a 24/7 emergency resource, and the environmental
engineering consultants at Vertex, they can safely and legally
dispose of spilled materials.
Spill Center acts as not only an internal information clearing-
house but also provides resources on regulatory reporting and
access to 3,500 cleanup contractors on standby in the U.S.
and hundreds more around the globe – essentially providing
what a company handling hazardous materials or involved in a
hazardous materials incident would need to quickly attend to a
The Bad News
Pókemon aside, from an exposure standpoint digital technology
today poses a threat that’s never been known before. While
cyber risk such as the theft of personally identifiable data has
been highly publicized, physical risk such as pollution sparked
by cyber breach is just as real and already occurring.
Consider that many factories and manufacturing plants are now
automated. Water treatment facilities, power stations, refineries
and pipelines use digital technology to control the flow of large
quantities of fuel, sewage and other hazardous materials. Risks
become even greater with the advent of plants operated almost
entirely by robots that create a so-called “dark factory.” Today,
even the signals and sensors on railroads with railcars carrying
dangerous chemicals are computer controlled.
Whether a teenager looking for fun, a dissatisfied employee,
a tech-savvy criminal or a terrorist, hackers have the poten-
tial to infiltrate operational systems from anywhere and cause
catastrophic property damage, bodily injury and environmental
claims in the millions of dollars.
But you don’t need a hacker to wreak havoc. With electricity
powering IT and other operational infrastructures, the conse-
quences of a power outage lasting just hours could shut down
a company’s HVAC system or pollution control equipment
causing a release of toxic emissions or untreated waste that
puts employees and the surrounding community and environ-
ment at risk.
A truck hauling hazardous waste loses control on a curve when something darts across
its path. The rig jackknifes as the driver hits the brakes, then overturns spilling its load
on the roadway and down a ravine into a public water supply. Now there’s not only a
major accident to deal with and a spill to contain and clean up, but also a myriad of
federal, state and local laws to follow along with documents to file in the aftermath.
And worse yet, that thing in the road wasn’t a deer but a Pókemon-chasing teenager.
Imagine this:
Destructive hacking attemps
targeting critical infrastructure
had encountered
attempts to
manipulate their
equipment through
a control system.
of companies
battled attempts
to shut down
their computer
networks.
Source: Organization of American States, 2015 Poll

4. Liberty International Underwriters is the marketing name for the broker-distributed specialty lines business operations of Liberty Mutual
Insurance. Certain coverage may be provided by a surplus lines insurer. Surplus lines insurers do not generally participate in state guaranty
funds and insureds are therefore not protected by such funds. This literature is a summary only and does not include all terms, conditions,
or exclusions of the coverage described. Please refer to the actual policy issued for complete details of coverage and exclusions.
LIU 557 © 2016 Liberty Mutual Insurance. All Rights Reserved. 11/3/16 SR
spill. Vertex steps in with extra cost oversight to ensure that the
responding cleanup contractor uses an expedient and cost-
effective method.
“What’s better about our app is that it gives our insureds the
ability to communicate directly and quickly with their own man-
agement, the responders and those with the expertise to review
the process in real time with 24/7 access to resources and
information so they are better informed when making important
business and response decisions related to an environmental
incident,” Bell said.
What once took precious hours now takes minutes to set in
motion. Gone are the days of a driver calling a dispatcher or an
excavator who just hit a leaky pipe tracking down the contrac-
tor who has to pinpoint the accident location and coordinate
a response with multiple parties. Instead, with the press of a
button, companies can activate an expert system that controls
costs and limits loss by identifying regulations, authorities and
best responders along with the chemical and technical informa-
tion needed to neutralize a spill. All the players – the customer,
Spill Center, Vertex and Liberty – have access to mission-critical
information in real time.
Red Tape
Anyone who has ever been involved in an incident knows that
costs can quickly add up. It doesn’t matter if someone else
caused the spill. A company is still liable if it meets the definition
of a spill generator – typically, the party with care, custody and
control at the time of release. Substantial fines can be levied if
environmental laws and regulations are not followed to the letter
and remedial efforts are not fully documented.
With so many local and state regulations in addition to existing
and ever-changing federal laws – such as the Clean Water Act,
Clean Air Act, Hazardous Materials Transportation Act and
Superfund Laws – maneuvering the legal landscape after a spill
can be mind-boggling. Additionally, every state has its own laws
that are sometimes stricter than the applicable federal ones and
local regulations can be even more stringent than state or federal
requirements. Indeed, federal law requires each state to orga-
nize itself according to local emergency planning committees
(LEPCs). Massachusetts alone has more than 350 LEPCs who
work with the state to apply specific cleanup requirements unique
to the area for responding to a hazardous materials incident.
With Liberty’s One TAP Response App, policyholders are able
to quickly sort through the maze and haze of information by
accessing a customer-facing website to check on the status
of the situation and response, rather than needing to call an
employee who might have been injured in the accident and is
receiving proper medical attention and not available. Imme-
diately capturing data on everything management needs to
know, Spill Center then distributes alerts in the form of an email
with a website link providing a summary of what was reported,
regulatory requirements and response contractors along with a
built-in customized communications tool enabling information
sharing within the organization or with external parties such as
legal counsel. LIU Claims and Vertex are immediately notified
to begin the process of response and ensure the quality of its
response.
The app also allows for uploading photographs and videos of
the spill to provide a visual record of the extent of contamination.
Visual documentation provides important support for the ratio-
nale of actions taken, for instance placement of absorbent booms
to contain contamination based on where the outfall to the
surface water took place. “As we’ve seen in countless situations,
this type of documentation has proven indispensable in manag-
ing claims and working with all the stakeholders,” added Bell.
The Future
As the threat of environmental exposure rises due to digital ca-
pabilities, so too will the introduction of digital technologies that
provide far-reaching benefits that help protect environmental
insurance policy holders and control loss. Robots are already
being used to take sensitive measurements in hazardous spill
areas and drones will soon be utilized to provide even richer
data connectivity.
“Digital transformation is all about the customer experience,”
said Bell. “We are improving customer access to critical in-
formation when the stakes are highest. Combining increased
responsiveness with higher levels of collaboration through the
almost instantaneous sharing of information helps companies
make smarter decisions that will ultimately protect the environ-
ment while saving time and money.”
“Digital technology cuts both ways. It can be used to help create a mess and also help get you out of one.”
said William Bell explaining technology’s impact on environmental insurance in terms of potential exposure along
with its capacity to mitigate risk and liability. With more than 30 years of experience in the insurance industry,
Bell is the Senior Vice President of Environmental for Liberty International Underwriters (LIU).