It has been several weeks since the deadly explosion at the West Fertilizer plant in West, Texas that killed 15, injured some 200, and destroyed a sizeable portion of the town, including a retirement center, a middle school and an apartment complex. Since then, my colleague Chad Hemenway has been at the forefront of a story that so far is yielding more questions than answers. The first and most important, of course, is who insured the plant, since at the time of this writing, there appears to have been no liability insurance of any kind at West Fertlizer on what has turned out to be a $100 million property loss. The deaths and injuries of so many people—many of whom were first responders killed as they tried in vain to put out the plant fire that touched off the explosion—will undoubtedly create a significant liability scenario, whether there is coverage or not. And this gives rise to further questions.

If West was able to operate without liability coverage, who on Earth allowed that to happen? Granted, liability coverage is the kind of thing that many will do without unless they are pressed to buy it. After all, there is a reason why auto liability coverage is mandated, and why banks require us to buy homeowners coverage in order to secure a home loan. One would think that the operator of a fertilizer plant, of all things, would think differently. Apparently not. Whatever business acumen the owners had, it surely did not extend to having an appropriate impulse toward procuring appropriate levels of risk financing. They obtained property insurance, PC360 has learned, and there another question arises…was the coverage obtained through an intermediary?

For a risk such as a fertilizer plant, it's certainly not impossible to obtain property coverage directly from the carrier, but honestly, it seems far more likely that it would have been done through a broker of some kind. And if that is the case, then where was the broker when it came to the conversation about liability? One can imagine the conversation between the folks at West and their broker ending in one of three ways. Either the notion of liability cover came up and one or both parties knew full well that none could possibly be obtained for what amounts to an explosives factory within a slingshot's distance of a school and a retirement home. Or, liability cover was there, and the plant simply declined to buy it. Or (and this strikes as the least plausible scenario) the intermediary simply failed to even bring it all up. Occam's Razor suggests that either liability couldn't have been obtained or that the facility declined to buy. If that is the case, then one would imagine that the intermediary would have obtained clear and unquestionable signoff from the client: No, Thank You, We Really Do Not Think We Need Liability Cover In Case We Explode The Entire Town.

Obviously, we are getting into deep speculation here, but given the paucity of public knowledge on this event, there is little else to do at this moment but wonder how such an event could have been allowed to pass, and how such a enormous shortfall in insurance could have happened, especially when at some degree the involvement of insurance professionals who would have known better than to let West Fertilizer go naked on liability.

There is another question for the intermediary, and it is to what extent it questioned Adair Grain about any change in material exposure at the fertilizer plant. The more one looks at this horrible situation, the more it looks like the disastrous culmination of ignorance and negligence rather than any kind of callous disregard for safety. Perhaps, one day in the past, there was some kind of safety inspection conducted by a carrier or an intermediary. Were follow-up inspections ever conducted? Brokers tell tales of how even their most worthy clients can be elss than forthcoming about changes in material exposure, and it is the sort of thing brokers must harangue their clients over if they are to get the truth of what exposures lie in wait. Where was such attention in West, Texas? Whatever was there, it clearly was not sufficient.

Let's imagine, if just for a moment, that West went direct to its property carrier, and somehow, the liability question never arose. In such a situation, one imagines the carrier might be awfully interested in seeing about conditions that would void the coverage. Say…a failure by the plant to notify the Department of Homeland Security of the presence of so much potentially explosive material, or the failure to properly notify local fire services that there was an explosion risk at the facility. These both were the case, and one wonders, again, if there is a Reservation of Rights letter on its way to the folks at Adair Grain. I imagine one is already there, if not en route. And if not…what could the carrier possibly waiting for?

These are just a few of the questions awaiting answers, and not just by a curious journalist or two. They are wanted by the families and friends of those killed and hurt by the explosion. They are wanted by the townspeople of West, who realize only too late how much danger they had been subjected to. They are wanted by the legal professionals who will most certainly be seeking recompense for their injured clients. They are wanted by every factory owner of every facility in Texas that might also be a little too close to residential and commercial uses.

So far, there are only questions. But there are answers. It is only a matter of time before they are found. And when they are, one imagines that the full story of this terrible tragedy isn't half as bad as it will be once all of the details are shown the light of day.

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