Who the Heck Insured This Place?

It hasn’t been easy to find who provided insurance for the West Fertilizer Co.—and maybe there’s a reason for that.

Call after call—to agencies and associations such as the Texas Department of Insurance, Texas Commission of Environmental Quality, and the Insurance Council of Texas—came up empty.

They don’t know, they say. Companies aren’t required to file insurance information with them. They’re wondering and asking around as well.

The Environmental Protection Agency said to call the plant for information regarding insurance. Not particularly easy in this case since it no longer exists.

Owners of the plant could not be reached for comment.

We called the only insurance agency in the small rural town of about 2,800—Muska Insurance Services.

Tommy Muska, the mayor of West, Texas, owns the agency. He bought it from his father, who bought it from the wife of a man who started the agency in 1920 because he owned and operated a local cotton gin and wanted to insure the cotton bales.

A man who answered the phone at the agency, who said he was a volunteer, told me, “Mr. Muska is very busy. I’m sorry; he can’t come to the phone.”

That’s an understatement. And it is very understandable. Muska likely provided insurance to many of the homes destroyed after a massive explosion at the plant the night of April 17. His office is getting calls related to his role as mayor in addition to calls reporting insurance claims. I left a message.

Not to mention, reports say Muska is also a volunteer firefighter. His neighbors and friends are likely among the dead and injured. Authorities continue to look for many who remain missing, and hope is dwindling. So far, more than a dozen are dead and about 150 are injured.

On top of all of this, Muska’s home, reports say, was among those destroyed by the blast that left only a skeletal structure of a nearby apartment building.

Among the heavily damaged or destroyed are about 75 homes, a middle school, and a retirement center.

Insurers are on the scene, say the industry, and are helping policyholders with claims.

But who insured West Fertilizer Co.? And as we find out what types of incredibly volatile chemical compounds were stored at the facility—coupled with the fact so many residences and two schools (the high school isn’t far away, either) are so close—how was this plant underwritten?

We’re potentially talking tons of ammonium nitrate—the same type of stuff Timothy McVeigh used to blow up the Oklahoma City federal building in 1995—stored within quick walking distance to a middle school entrance.

The explosion April 17 is said to be hundreds of times stronger than the blast McVeigh fabricated.

The cause of the explosion remains under investigation, it should be noted, but authorities say ammonium nitrate was found at the scene.  

Reportedly the plant’s safety history is mixed, at best. It was built in 1962, so the facility was “grandfathered” and didn’t have to adhere to some state and federal standards until someone thought it was a good idea to change that.

The EPA in 2006 fined West Fertilizer for failing to update its risk management plan but there haven’t been any more recent violations. 

It is impossible for me to imagine an insurance company sending an investigator and/or underwriter to an apparent outdated facility like this and coming out with a signed contract for coverage.

It just doesn’t add up. Not when all I’ve heard recently, at least from the specialty insurers I’ve spoken to on other high-risks, are statements like, “We send someone to look at every site,” and “We have underwriters that come from this particular industry and this is all they do—they just look at these risks.”

I'm interested in hearing from industry experts and risk managers on this topic, and I encourage you to contact me.

Additionally, the truth is it is entirely possible in Texas for employers not to provide workers compensation insurance. These so-called “nonsubscribers” take the risk (and lose important legal protections). About 20 percent of employees in Texas are employed by nonsubscribers.

So, there indeed might be a very good reason it is difficult to find out who insured this place. I just don't want to think about that possibility. 

About the Author
Chad Hemenway

Chad Hemenway

Chad Hemenway is News Editor for PropertyCasualty360.com and PropertyCasualty360-National Underwriter. He contributes regularly to the website as well as print and digital publications, with oversight of news content. Chad has been a journalist since 2000--first working at weekly and then daily newspapers covering police, fire, courts, schools, and municipal and county government. He has been covering insurance news since 2007. Prior to PC360-NU, Chad worked at A.M. Best Co., covering more than 50 personal and commercial insurers as well as litigation, legislation and regulation. Today Chad's insurance-news reporting includes the E&S/Specialty market, but he continues to write about all lines of P&C insurance. He may be reached at chemenway@sbmedia.com. Find him on Twitter @CTHemenway.

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