Availability of Insurance for Petroleum Underground Storage Tanks

GAO discussed the availability of insurance for petroleum underground storage tanks. GAO found that: (1) the Environmental Protection Agency (EPA) proposed regulations containing a $1-million to $6-million financial responsibility requirement for petroleum tank owners and operators, a 3- to 5-year period to install leak detection devices, and a 10-year period to upgrade or replace tanks already in the ground; (2) two insurance companies provide insurance for about 15 percent of all U.S. tanks, but offer maximum policy limits of only $2 million; (3) at least six insurance companies withdrew from this insurance market and others were reluctant to enter due to potentially high losses resulting from leaks; (4) many of the methods EPA allowed tank owners to use to demonstrate financial responsibility were more expensive than insurance; and (5) many small businesses were unable to obtain the insurance or the alternatives to comply with EPA requirements. GAO believes that: (1) accelerating implementation of safety standards and phasing in implementation of the financial responsibility regulations would allow additional time for insurers to reevaluate the risks and tank owners to pursue other financial responsibility methods; and (2) EPA may want to reevaluate its proposed minimum aggregate level and self-insurance requirements.