You may have seen the video footage of the wave of toxic red sludge that flooded out of a failed reservoir at an alumina refining plant in Hungary on Monday, inundating villages and leaving at least four dead and 120 injured.
Today NPR reports that the sludge has reached the Danube River Ã¢â‚¬“ EuropeÃ¢â‚¬â„¢s second longest river Ã¢â‚¬“ though Hungarian officials are quoted as saying no immediate damage is evident.
The European Union earlier had warned that the spill could pose a serious environmental problem for 12 countries if it contaminates the Danube.
The flood, estimated at 700,000 cubic meters, or 185 million gallons, swept cars off roads, damaged bridges and houses and forced the evacuation of hundreds of residents, according to the New York Times. People who came into contact with the substance were burned through their clothes.
Authorities have ordered a criminal inquiry into the accident. It is still not known why part of the reservoir wall collapsed. The Ajkai Timfoldgyar plant is owned by Hungarian aluminum production and trade company MAL Rt.
The disaster underscores the point recently made by I.I.I. president Dr. Robert Hartwig that large-scale industrial accidents are not as rare as you might think and can result in losses in the hundreds of millions of dollars. Earlier this year, a power plant in Middletown, Connecticut exploded leaving five dead and 27 injured.
Insurers play a key role in insuring these facilities.
Man-made global disasters triggered insured losses of about $4 billion in 2009, according to Swiss Re.Ã‚ Some 155 man-made disasters occurredÃ‚ in 2009, including major industrial fires and explosions; aviation, maritime and rail disasters; mining accidents; building/bridge collapses; and losses related to terrorism and social unrest.
The April 2010 explosion at the BP Deepwater Horizon oil rig in the Gulf of Mexico will add to the insured loss tally from man-made disasters this year.
As for environmental liability arising from the disaster in Hungary, EuropeÃ¢â‚¬â„¢s Environmental Liability Directive (ELD), in effect since April 30, 2007, is based on the Ã¢â‚¬Å“polluter paysÃ¢â‚¬ principle.
A bulletin released by Aon and reported at Insurance Journal, warns companies with industrial operations in Europe that the ELD leaves no place to hide:
Aon goes on to warn that events such as this could ultimately lead to the total collapse of a company at fault if they do not have suitable insurance coverage in place.
Comprehensive environmental insurance programs can be put in place and the market can provide coverage for up to Ã¢”š ¬150 million ($210 million) for an individual risk, Aon adds.