Misplaced Liability, Insurance Unavailability, and Counterproductive Environmental Policy: A Case Study of the Scrap Metal Industry

摘要

The scrap processing industry recycles metals like steel, aluminum, and lead from discarded consumer products. Although this industry serves the purposes of energy and environmental policy, about one third of its members have been held liable for cleanup under the American Superfund law. The insurance industry has promulgated widely varying estimates of the costs and consequences of this law, but few facts have been adduced. A unique survey of over 500 scrap recyclers indicates the magnitude of the cleanup costs, transactions cost of litigation, and the resultant loss-prevention and loss-protection responses. The empirical loss distribution provides a basis for calculating the pure premium that might be charged by a risk-retention group and identifies reasonable bases of exposure classification. 7 refs., 6 tabs.