01:00 AM EST on Tuesday, February 10, 2004

BY JESSICA RESNICK-AULT
Journal Staff Writer

FALL RIVER -- Residents and insurance brokers have said they fear a proposed liquefied natural gas plant will drive up property insurance rates or make coverage unavailable, but state insurance regulators and LNG industry officials call these worries unfounded.

"If it's located [in Fall River], it will affect the insurance rates," said Swansea insurance agent Paul C. Burke, speaking after engineer James A. Fay gave a presentation on the possible hazards affiliated with the proposed facility.

An explosion igniting just a fraction of the terminal's LNG could cause wooden buildings within a mile to catch fire in just 40 seconds, according to Fay, a professor emeritus of mechanical engineering at Massachusetts Institute of Technology and a former chairman of the Massachusetts Port Authority.

Such a blaze could affect the thousands of houses that city officials say lie within a mile of the facility, Fay said. A fire aboard an LNG tanker making a weekly trip to the plant could scorch shoreline homes and businesses, Fay said.

Similar LNG import facilities proposed for Field's Point in Providence and Brayton Point in Somerset pose the same risks, Fay said.

Burke said this potential threat would not be overlooked by companies that insure property in the area.

"If that plant goes in, or anything goes in that increases the risk around the property, a smart insurance company is going to go out, do an assessment and say 'the risk is too high for us to be in this area,"' said Burke, who owns Insurit Agency, and teaches insurance policy to agents statewide. If such a hike were imposed, Burke himself could be affected: he lives about a half-mile from the facility proposed for Somerset.

He said it's too early to estimate exactly what the rate hike will be from insurance underwriters, who provide property insurance.

Such predictions are overblown, according to Christopher Goetchus, spokesman for the state Division of Insurance. "For these kind of businesses, or for any kind that pose a hazardous risk, risk managers work to make sure they're kept safe," he said. "It does not impact commercial property insurance or personal property insurance in the community."