Mosaic Insurance has developed a pioneering climate solution to support the growing number of companies working to remediate abandoned and orphaned oil and gas wells across North America.

The company’s environmental team has launched a hybrid pollution product that de-risks the current wave of efforts spurred by government incentives to plug disused wells, thereby progressing climate-change goals.

“Mosaic is proud to be at the forefront of supporting companies tackling this urgent challenge that enables real progress on climate mitigation,” said Karen Reilly, Mosaic’s head of Americas, Environmental Liability.

“Our innovative, responsive coverage brings certainty to the many liabilities involved. By doing so, Mosaic is helping unlock the growth of projects that directly reduce greenhouse gas emissions, a win for our partners, our industry and the planet.”

According to the US Environmental Protection Agency, an estimated two-million inactive, unplugged oil and gas wells are scattered across US states. The sites pose significant environmental and health threats, from leaking toxic chemicals to releasing methane, a potent greenhouse gas contributing to climate change.

In 2021, the US federal Orphaned Well Programme was established under America’s Bipartisan Infrastructure Law, providing $4.7 billion in funding to plug, cap, and reclaim orphaned oil and gas wells and related facilities on US federal lands. Federal and provincial government incentive programmes have also been launched to clean up wells across Canada.

Mosaic environmental specialist Max Horn recognized a critical coverage gap in the market and developed a product to address the unique exposure, providing critical coverage to companies undertaking the well-plugging process.

“We saw an opportunity to bridge the divide between traditional contractors pollution liability and standard control of well policies,” said Mr Horn, who worked closely with partners at global broker Aon and Tradewater, a project development company focused on preventing harmful greenhouse gases releasing into the atmosphere.

“While CPL typically covers pollution events and COW covers well control and redrill costs, neither fully addressed the needs of orphaned well remediation projects.

“Mosaic created a tailored solution that combines the two, offering more comprehensive protection for this evolving risk,” said Mr Horn, noting Mosaic and Aon have entered into an exclusive distribution agreement for the new plug-and-well exit liability product to bring the solution to project owners, well-plugging contractors, and buyers of carbon credits generated from well-plugging operations.

Mr Horn is driving product development for several emerging energy-transition initiatives at Mosaic, not only focused on oil and gas wells, but also the equally fast-growing sphere of carbon capture and sequestration, which has similarly been galvanized by government incentives and embodies a slate of environmental and technical risks.

“Through well-designed policies to cover these potentially complex challenges, insurers can play a significant role in advancing climate solutions,” noted Mr Horn.

Environmental liability is one of seven lines of specialty business at Mosaic; the others include cyber, transactional liability, political risk, political violence, professional liability and financial institutions.