Utilizing third-party inspections for preventing major chemical accidents

Abstract

This paper proposes using certified third parties, coupled with Model Risk Management Programs (Model RMPs), to implement EPA's Proposed Rule on the prevention of chemical accidental releases. We concentrate on the insurance aspects of this third-party approach and show that it could enable insurers to more cost-effectively provide coverage against the risks of chemical accidental releases. The third-party approach may also signal the facility's safety and reduce the enforcement costs of regulations.