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Superintendent Benjamin Lawsky New York State Department of Financial Services One State Street New York, NY 10004-1511

September 21, 2012 Dear Superintendent Lawsky: On July 20, 2012 Environmental Advocates of New York wrote you requesting that the New York State Department of Financial Services seek information from insurance companies about how they intend to deal with the risks associated with hydraulic fracturing operations. As we have yet to receive a response I am writing to follow up on our initial letter, present some new information, and repeat our request that your agency investigate insurance practices related to hydrofracking. In July Nationwide Mutual Insurance Company announced that it would not cover damages related to hydrofracking under insurance policies issued to businesses and individuals because, After months of research and discussion, we have determined that the exposures presented by hydraulic fracturing are too great to ignore. Risks involved with hydraulic fracturing are now prohibited for General Liability, Commercial Auto, Motor Truck Cargo, Auto Physical Damage and Public Auto (insurance) coverage." of the potential risks. In August Environmental Advocates of New York received a letter from MetLife saying that the insurance giants homeowner policies contain exclusions for pollution and earth movement (which is defined in a manner that would include hydrofracking), and thus would not cover damages from hydrofracking (attached). Also in August, the Professional Insurance Association released a fact sheet (attached) stating, There is no liability coverage for the homeowner There is almost no coverage for damage to the homeowners property. If the home was damaged by fire or vehicles, caused by the fracking operations, there would be coverage. But the typical policy does not cover other perils that may possibly ensue from fracking, such as earth movement, land erosion or pollution. Given the wide scope of potential drilling that is anticipated in New York State in the coming decades, business owners, landowners, consumers, and state and local officials should have a better idea of how the insurance industry will choose to address the well-documented risks associated with hydrofracking. In this instance, it would seem that your agency can shed light on the risks landowners and businesses may be assuming should New York allow fracking.
353 Hamilton Street, Albany, New York 12210 * Tel 518.462.5526 * Fax 518.427.0381 * www.eany.org

We therefore repeat our request that your office open an inquiry into these matters. Hydrofrackings impacts on New York homeowners who have leased their land and adjacent landowners liability, and the impact this issue may have on the public at large must be fully examined before any permitting begins in the state. Sincerely,

Katherine Nadeau Water & Natural Resources Program Director Environmental Advocates of New York

353 Hamilton Street, Albany, New York 12210 * Tel 518.462.5526 * Fax 518.427.0381 * www.eany.org

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