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NEW YORKInsurance and legal experts expect property and business interruption claims from the steam pipe explosion in New York last week, which shut down several busy blocks for days.
Whether the asbestos found in the mud and debris that spewed from the pipe results in further liability for Consolidated Edison Co. of New York, which owns the pipe, remains to be seen, industry sources say.
At least one insurance executive said the incident could wind up being a catastrophic loss over time.
City officials continued to clean up Midtown Manhattan late last week following Wednesday's explosion of an 83-year-old underground steam pipe that sent plumes of hot steam and debris into the air from a 20-foot hole created in the street. The eruption lasted for more than two hours and knocked out windows of nearby buildings. One woman died from an apparent heart attack while trying to get away from the blast, and more than 40 others were injured, including one man who remained in a medically induced coma with burns to 80% of his body.
The heavily commercial area remained closed by city authorities late last week as ConEd continued to clean up the area and test for asbestos.
While the New York City Department of Environmental Protection said last week that no asbestos was found in the air, it did find asbestos in the mud and debris, but officials downplayed the exposure to individuals.
"Developing an asbestos-related illness after being exposed for a short-time--even at high levels--is very unlikely," New York City's Office of Emergency Management said in a statement.
Rodney Taylor, managing director of Aon Environmental Services Group in New York, said it's too soon to know whether ConEd will face liability over the asbestos exposure, since it takes years before respiratory problems arise in exposed individuals.
"I think with the asbestos, what they're going to wind up with, if anything, is medical monitoring for a period of time to see if any problems in fact develop for people who might have been exposed to the vapors," Mr. Taylor said.
A spokesperson for ConEd would not discuss insurance coverage information.
Industry sources say business interruption claims are likely to have the biggest impact on the market.
"You have people who can't get to their businesses. Whether or not that results in some kind of loss remains to be seen, but certainly you've got civil authority going on and for others they might have some property damage," said Ed Joyce, a policyholder attorney with Heller Ehrman L.L.P. in New York.
"It seems to me, if there are going to be significant claims, they're going to be business interruption claims rather than property claims," due to all the businesses that were forced to close in the area, said Finley T. Harkham, a senior shareholder and policyholder attorney for Anderson Kill & Olick P.C. in New York.
Paul McVey, managing director and head of global property claims for Marsh Risk Consultants in New York, said the broker has yet to receive "a lot of calls" regarding the burst, but he anticipates some first-party property claims, some ingress/egress business interruption claims from those who did not have property damage and some "extra expense claims" from those who had to relocate their business.
While observers say it's too early to quantify the loss, at least one insurance executive says it could end up being a catastrophe.
"The nature of the event--with people and traffic passing, working and residing in proximity of the break and reported asbestos content--signals that it could be a catastrophic liability loss that will materialize over an extended period," said Michael Cahill, executive vp of reinsurance broker BMS Intermediaries Inc. in Shelton, Conn.
The market "is expressing concern over" over the magnitude of the event, he said. "This risk may not have been fully considered when underwriting utility companies with legacy systems in densely populated cities nor may utility companies be purchasing sufficient liability limit."