Despite the financial uproar in the insurance world last fall, brownfield developers appear to have little to fear among the major environmental insurance carriers.

“There are a lot of very strong, financially secure providers in environmental insurance,” said Ken Cornell, executive vice president of JCH Environmental Insurance Brokers in New York City. Even American International Group Inc. (AIG), which has received more than $150 billion in assistance from the federal government to head off bankruptcy, still maintains an A rating from A.M. Best Co. AIG is the parent company of AIG Commercial Insurance and AIG Environmental, which are legally distinct entities.

“Environmental insurance has always been a very stable market,” added Alan Bressler, president of CPR Companies in Atlanta. “Since it really came into its own in the 1990s, there have not been wild fluctuations in pricing . . . from one year to the next.”

This is good news indeed for those with a stake in brownfield development projects. It's always been incumbent on developers to identify the environmental insurance programs that best pinpoint the coverages required to indemnify their projects. This effort takes on more urgency when one considers the challenges that beset not only those with a stake in brownfields—but carriers as well, who had to scramble to stabilize their books of business due to economic instability in 2008.

The perception of troubled waters may be luring new carriers into the market. Stamford, Conn.-based Hudson Insurance Group launched its new Environmental Products unit on Dec. 1, 2008, headed by senior vice president Steve Porcelli. And Philadelphia Insurance Companies in Bala Cynwyd, Penn., announced in November that AIG's Susan Doering had joined the firm to start a full-service environmental underwriting division.

Among the market veterans, “premiums are staying low and coverage is pretty flexible, because there's plenty of competition,” says Ken Ayers, managing director with Aon's Environmental Services Group in Chicago. “In the past, we saw clients getting a quote from [one major company] and being happy with it. Now, people are looking at two or three companies, checking the A.M. Best ratings, making sure the company will be around in 10 years.”

Following is a brief but information-rich synopsis of the insurers that provide products and services in the environmental insurance space:

ACE USA
Philadelphia
www.ace-ina.com
Backed by the global resources of the ACE Group of Companies, ACE USA offers coverage throughout the world. Its broad array of environmental insurance products includes Premises Pollution Liability for both gradual and sudden accidental first- and third-party environmental liabilities, along with Contractors Pollution Liability for both gradual and sudden accidental third-party liability, plus CPL with coverage for mold and CPL with errors and omissions coverage.

In addition, “our Remediation Cost Containment product helps with cost overruns associated with any type of remediation being done on a brownfield,” said Jon Peeples, vice president for ACE Environmental Risk.

The policy can be tailored to the customer's needs, with the ability to utilize a finite risk approach to fund the anticipated remediation costs.

In November 2008, ACE unveiled two new integrated products for pollution and casualty insurance coverage: ACE PaC SM and ACE ECO PaC SM. “These products offer both general liability coverage as well as pollution coverage in one seamless policy, thus alleviating the concern that there could be coverage gaps between the general liability and pollution coverages,” said Bill Hazelton, senior vice president, ACE Environmental Risk.

ACE PaC combines general liability and pollution liability into a single policy form. Pollution liability coverage extensions include premises pollution, transportation and disposal site pollution, products pollution, sudden and accidental pollution, and pollution discovery cleanup.

The ACE ECO PaC product, designed for contractor-related/consulting services, pulls together general liability, contractor's pollution liability, and optional professional liability into a single policy form.

Limits for both new products are available up to $1 million occurrence/$2 million aggregate, with higher limits on request.

American International Group Inc. (AIG)
New York City
www.aig.com
AIG Environmental, a unit of AIG Commercial Insurance, pioneered environmental insurance nearly 30 years ago. Today it continues to expand and enhance its Cleanup Cost Cap and Pollution Liability coverages.

In October 2008, the carrier added coverage to its Pollution Legal Liability product for risks related to indoor air quality, non-owned disposal sites, and emergency response costs, and to offer financial assurance for underground storage tanks. AIG also expanded the definition of Pollution Conditions to include healthcare-specific coverages that address pollution conditions from infectious and pathological waste, bioterrorism agents, mold, and legionella pneumophila.

“These changes are a direct result of feedback we received from our policyholders,” said Joseph Boren, former chairman and chief executive officer of AIG Environmental.

Other new AIG coverages include Contractors Pollution Liability Insurance designed for contractors with revenue under $10 million, with a minimum deductible of $2,500, and AIG Passport for Pollution Legal Liability, a service for U.S.- or Canada-based multinational companies designed to facilitate buying locally admitted PLL insurance to cover international operations and subsidiaries.

AIG offers two PLL policies that cover site-specific risks: PLL Select and PLL Real Estate. Pollution Legal Liability Select is a flexible, menu-driven policy that can be tailored to meet regulatory, contract, lender, landlord or shareholder requirements. AIG PLL Real Estate is designed for both single-site and portfolio risks for pollution conditions that could impede a property's operation, expansion or transfer.

AIG's Contractors Pollution Liability policy is available on either a claims-made or occurrence basis, with expanded coverage offered for microbial matter, non-owned disposal site coverage, worldwide coverage and terrorism coverage.

Arch Insurance Group Inc.
New York City
www.archinsurance.com
The Environmental Group at Arch offers coverage for environmental exposures worldwide, in addition to risk management guidance and value-added services such as contract vetting and review, risk management workshops and pre-claim assistance.

Arch provides coverage on a primary or excess basis for most environmental products, and contractor coverages can be tailored to meet the needs of a specific project or a firm's covered operations. Pollution Legal Liability, Contractors Pollution Liability, Contractors Pollution Residential Wrap-Up Liability, Contractors Pollution & Professional Liability, and Environmental Consultants Professional and Pollution Liability are the major products offered.

In addition, Arch's Environmental Multi-Line Policy combines general liability, CPL and professional liability with a separate coverage part for mold.

Chubb Group of Insurance Companies
Whitehouse Station, N.J.
www.chubb.com
Chubb's Environmental Site Liability insurance provides the flexibility of a nonadmitted policy form for property buyers and sellers, with four different insuring agreements. Designated insurance sites can be located anywhere in the world, and coverage also includes multiyear policy terms, discovery trigger for on-site cleanup, protection for releases from active or inactive storage tanks, and remediation costs including restoration costs.

The Contractors Pollution Liability helps protect against a wide range of pollution risks, with multiyear policy terms, insurance for all named insured operations or per project, and insurance for completed operations, occurrence or claims-made contracts, and remediation costs, including restoration costs. In addition, Chubb's Owner-controlled Insurance Program allows companies to create a custom environmental insurance program that insures an entire project against pollution risks, including all project contractors, off-site transportation and exposures at non-owned locations.

Great American Insurance Group
Plymouth Meeting, Penn.
www.greatamericaninsurance.com
Great American opened its environmental unit in March 2008, “bringing on very senior people to head the division,” said Pete Pantalone, vice president, Environmental Division for the company. “It turned out to be very fortuitous, because environmental insurance needs a new player at this time.”

Pantalone said Great American's standard environmental policies offer a number of built-in enhancements: contracting services liability and coverage for non-owned disposal sites, contingent transportation, mold, legionella, natural resource damage, listed abandonment, plus fines and penalties. The company's environmental products include Premises Environmental Liability, Contracting Services Environmental Liability, Professional and Contracting Services Environmental Liability, and Professional PLUS and Contracting Services Environmental Liability (for general contractors operating under a design/build delivery methodology).

Great American has also created an Excess Environmental Liability policy that provides excess coverage for either a claims-made or occurrence primary pollution policy written by an approved and qualified environmental carrier. The product is designed for both new and historical conditions and covers either sudden or gradual pollution events.

Great American does not plan to get into the market for cleanup cost cap coverage, added Pantalone.

Liberty International Underwriters (LIU)
Boston
www.libertymutualgroup.com
Liberty International Underwriters, part of Liberty Mutual Group's international operations, specializes in environmental policy forms with one-year terms worldwide, according to spokesperson Adrienne Kaufmann. “Policies of longer-term duration are considered rarely, and very selectively,” she said. LIU's coverages include Fixed Site Pollution Legal Liability, Contractor's Pollution Liability, and Contractor and Professional Services.

Introduced last fall, LIU's new Environmental Advantage policy combines environmental impairment liability, general liability, and errors and omissions insurance for small businesses that specialize in pollution risk analysis and cleanup. The carrier opened a new office in Denver to house the national service center for the Environmental Advantage product.

XL Insurance Environmental
Exton, Penn.
www.xlcapital.com
Pollution and Remediation Legal Liability, Remediation Stop Loss, and Contractor's Pollution Legal Liability policies are all offered by XL, an industry veteran that has provided environmental insurance since 1979. The company has also developed a Consultants Environmental Liability product to provide coverage for acts, errors and omissions, as well as pollution conditions that arise from both contracting services and professional services. It can be written on an admitted basis in most states.

XL's environmental coverage expertise includes first- and third-party cleanup, third-party bodily injury/property damage, coverage for pollution conditions with no distinction between sudden accidental and gradual coverage, and coverage of changing legislation.

In Canada, XL's specialized environmental underwriting team recently beefed up its ranks with the addition of Ken Lam as senior environmental underwriter and Carl Spensieri, who has more than 10 years' experience in environmental engineering. “They are familiar with the environmental risks that clients face and the insurance programs that are most beneficial to them,” said Greg Dunn, XL Insurance's environmental branch manager.

Zurich
Schaumburg,Ill.
www.zurichna.com
Offering environmental insurance for more than 16 years, Zurich provides broad coverage including pollution legal liability, contractor's pollution liability, professional consultant's liability, professional environmental consultant's liability, and cleanup cost cap.

In April 2008, Zurich rolled out its Z Choice environmental liability policy, a menu-driven form that enables policyholders to customize coverage and limits (up to $50 million). Core coverages include first- and third-party bodily injury and property damage for on- and off-site cleanup for new and existing pollution events. Then, customers can supplement the program with such optional coverages as natural resource damages, business interruption, mold, transportation of materials, and financial assurance. Individual coverage limits can be customized up to an aggregate limit of $25 million.

“Z Choice is a flexible program that provides our customers with the ability to tailor coverages for their unique fixed-facility exposures and pay only for the coverages they need,” said Kenneth Berger, executive vice president of Zurich's Environmental unit.

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