Canadian Underwriter

Atlantic insurers back new treatment for domestic oil tanks

October 26, 2001   by Canadian Underwriter

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Faced with escalating losses arising from toxic spills associated with domestic oil tanks in the Atlantic provinces, insurers have backed a new treatment process that is expected to significantly reduce corrosion and the potential of leaks.
Insurers operating in Atlantic Canada have incurred 50%-a-year increases over recent years in claim costs associated domestic oil tank spills, according to the Insurance Bureau of Canada (IBC). Total insured losses associated with oil tank spills amounted to $11.9 million between 1996 to 1998, boosting this particular category of claim to the sixth highest in the region. The IBC believes that there are around 400,000 domestic oil tanks of varying age within the Atlantic region.
Research conducted by the bureau suggests that the cost of oil spills will rise rapidly in coming years unless mitigation action is taken. As a result, insurers have prompted the Atlantic provincial governments to introduce legislation pertaining to the installation and upkeep of oil tanks. So far, only Prince Edward Island has reacted to the call, with new regulations requiring that all tanks within the province be replaced every 15 to 25 years depending on the tank design and thickness. "What may have once been considered a minor problem now costs consumers upwards of tens of millions of dollars annually," says IBC Atlantic vice president Don Forgeron.
The new oil tank treatment process consists of a polymer-based coating which is expected to combat the potential of corrosion. Dr. Stephen Armstrong, an associate professor at Dalhousie University, developed the new coating in conjunction with research company Jacques Whitford Environment Ltd. Plans are already underway to produce a cost-effective application. "A production process is currently being developed which will allow for the low-cost application of the coating," comments Bill Spencer, the research and development manager at Kerr Heating Products, a co-partner of the project.

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