Unfortunately, it looks as if the West Fertilizer Co. was significantly underinsured.

A bit more than a week after a massive explosion, that registered on seismographs as a 2.1-magnitude quake, devastated the small, rural town of West, Texas, there are still more questions than answers.

The April 17 blast heavily damaged or destroyed 140 homes, a middle school, an apartment building, and a retirement center.

That's the property toll, which doesn't include the damaged nerves of people directly or indirectly impacted by the blow of the blast's shockwaves.

The Insurance Council of Texas now estimates insured property losses are $100 million—which includes the plant.

Dan Keeney, spokesman for Adair Grain Inc., parent company of West Fertilizer, tells PC360 West Fertilizer was insured but how much and by whom are tidbits Keeney has not been authorized to release.

This leads to one obvious conclusion: The West Fertilizer plant likely had some kind of property insurance. Otherwise, there would be no reason for ICT to include West Fertilizer in its estimation of insured losses.

Emails and calls I received since my initial coverage of this story have consistently named the property insurer. I won't release it until I've independently confirmed the information. This insurer has been contacted and I've been told by them to contact the plant owner. You've just read the results of that endeavor.

PC360 has learned only a handful of carriers serving the agribusiness niche would think about providing general liability and/or umbrella coverage on this type of risk.

But who is underwriting a facility known to be storing hundreds of tons of the fertilizer ammonium nitrate—a volatile chemical compound Timothy McVeigh used in a bomb to blow up the Oklahoma City federal building in 1995?

(The cause of the West, Texas explosion remains under investigation.)

West Fertilizer did not tell federal authorities it had this much ammonium nitrate on site, which it was required to do. It may not have told too many people if the West ambulance service medical director had no idea about it, as the New York Times reported this week. No one knows if the plant told the fire department, and West Fertilizer doesn't look to have had any kind of appropriate risk management plan.

Therefore we could easily assume no insurer would have provided this facility with liability insurance—especially any company owned by W.R. Berkley Corp., one within the handful of well-known providers to this niche of agribusiness.

Several Berkley companies have filed a subrogation lawsuit against Adair Grain, claiming negligence on the part of West Fertilizer. The suit was filed on behalf of the companies' policyholders—businesses, churches and individuals of West, Texas.

The suit does not name an insurer of the plant.

I've been asked why I think I should be able to find out Who the Heck Insured This Place?

The question surprised me, but here's an answer other than, “Because it's what I do.”

A business lacking insurance (and admittedly this one—in this case—may have been underinsured had it possessed every kind of coverage at the highest limit available to it) isn't just a shame for that business.

It affects other insurers, as we've seen with the Berkley suit. This, in turn, affects policyholders—not only in West but in the towns surrounding supposedly thousands of facilities in the country just like West Fertilizer.

It affects secondary business partners. If and when subrogates find Adair Grain's pockets shallow, they'll move on—maybe to chemical manufacturers or transportation providers, for instance. In turn, more insurers are brought to the fray.

It affects the business owned by the Adair family who, by all accounts, was beloved in West. The business was around for a long time. It's gone now and it's not coming back. Whatever financial footing the family stood on is quickly crumbling. In all likelihood, they will be wiped out financially.

If a retailer with such an enormous potential liability had been required to purchase some kind of liability coverage, it would not be a stretch to imagine that the company or companies providing said coverage would have had a role to play in ensuring the safe operation of the plant. This seems especially plausible given the insurance industry's attention to risk management and loss mitigation, and given that the town of West had been permitted to expand so inexplicably close to an industrial use with a substantial explosion hazard.

“This is the way things are done here” isn't an excuse. I understand the sentiment, but it isn't an excuse.

Fifteen people died. There are 180 families being helped by the Red Cross. Many aren't insured. Businesses are gone or severely damaged and/or interrupted.

That is not the way things are done. That is the way things are undone.

Special Reports /

West Fertilizer Property, Little Else Likely Insured

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