Mining companies using fracking technologies aren’t covered under their existing public liability policies, according to an environmental insurance expert.

“There is no cover for claims from fracking operations under public liability policies,” Marsh Managing Principal – Risk Management Lionel Mintz told insuranceNEWS.com.au.

“Miners need to use a special environmental policy to cover the risks from fracking.”

In Australia, fracking is mainly being used to extract coal seam gas. The technology uses water, sand and additive chemicals pumped into wells to fracture shale formations and release the gas trapped in them.

The water is returned to the surface by the pressure of the existing rock formations, and unless it is stored correctly there could be environmental issues resulting in third-party claims against the miner.

“There has been a lot of confusion among the public about what fracking is,” Mr Mintz said.

“There are environmental issues, but a lot depends on how hard the rock is and what exotic chemicals are used.”

He says chemicals are not always used in fracking, but the impact of pumping water into shale and the effect on local water tables is an important issue.

“If the miner disturbs the water table then things will go wrong,” Mr Mintz said. “The idea is to extract the gas from the rock without setting off other issues.”

Once the gas is at the surface it must also be stored correctly as any accidental release could again lead to third-party claims.

“In Africa, there was a case where a mining operation accidently released methane gas and the plume killed a lot of people,” Mr Mintz said. “They couldn’t control the gas release.”

Some issues involved with fracking have resulted in potentially large claims heading for the courts.

Mr Mintz says the fallout from these claims is making the insurance industry take a “very conservative” approach to insuring the risks associated with fracking.

Marsh is offering a contractors’ pollution liability policy to cover bodily injury, property damage and economic losses resulting from environmental impairment.

This impairment covers “any long-term changes to the natural condition of soil, air or water (including groundwater) caused by the release or escape of solid, liquid or gaseous substance in connection with operations of coal seam gasification,” according to Marsh’s product description.

Mr Mintz would not be drawn on how many policies Marsh has sold in Australia or whether it is facing any claims, claiming “commercial confidentiality”.