Many of us who spent years in the environmental insurance space know one thing: There have been significant level of change in the Brownfield landscape during the past decade regarding the redevelopment of Canadian sites.

Canadian brownfield redevelopment continues to increase in volume. As an insurance provider assessing these sites for the purpose of providing an insurance package, we have seen that in most cases partnering with the Canadian stakeholders is worth the process of evaluating the complexity of these sites. The approach stakeholders must take from an environmental risk management perspective is on an entirely different level than the approach for traditional commercial or residential sites.

Effectively addressing risk management issues and controlling exposures is dependent on what type of transformation the facility plans to undergo. We’ve had a chance to work with key Canadian stakeholders on various types of brownfield renewal projects including light industrial, heavy industrial and green energy, a blanket term that encapsulates anything from solar power and wind turbines to bio-diesel and hydroelectricity.

These facilities still need standard coverage similar to other commercial properties, but additional coverages must be tailor-applied on a case-by case-basis. Is the facility a converted steel mill from the turn of the 19th century, or a newer facility with state of the art controls that carries less risk by virtue of its age?

Pinpointing the "right" coverage is a complicated process that not only affects the developer and buyer, but the seller, underwriters and communities in which the sites are located. There is a policy “sweet spot” that must be “struck” to provide comprehensive protection at the lowest cost, and it’s critical for stakeholders to begin the process early and understand all the ramifications. 

For instance. Alper Services recently secured the first phase of coverages with a large former paper mill site in Quebec. The site had closed in fall of 2008, and the project will completely transform the facility into an alternative green energy complex. The initiative has received widespread community, local, and national government support, with Canada’s Minister of Foreign Affairs publicly praising the effort and its expected positive impact.

While the formal phases of the physical redevelopment have only recently begun, the environmental risk management insurance considerations were initiated more than a year ago. What stakeholders sometimes fail to understand is how complex and time consuming this process is, which sometimes can take years.

In general, projects like this one begin with partnering with insurance experts to identify pre-existing environmental conditions such as contaminants, move to the creation of detailed reports with thousands of pages of data and transition to remediation recommendations to start site preparation. Historical activity and site usage play a role, and underwriters with specialty knowledge facilitate the process, making sure that the buyer and seller are being protected.

Different categories of coverage entail a deep level of involvement, assessment and expertise and incorporate a variety of strategies. For this particular initiative, efforts include Site Pollution, First and Third Party Pollution, General Liability and Excess Liability, to name just a few. For these buyers and sellers, a custom program is essential to helping manage the total cost of risk while swiftly addressing their continually changing exposures associated with the site. 

Creating sustainable, long-term developments with a significant environmental, social and financial impact is clearly the goal of any brownfield redeveloper, and while there are many factors that contribute to a successful project, buyers and sellers need to be cognizant and proactive in addressing and minimizing their risks.

Todd Adams is Senior Vice President and Head of Environmental/Industrial Services at Alper Services, LLC Founded in 1966, Alper Services LLC is a comprehensive insurance services company headquartered in Chicago, providing business, financial and insurance services designed to protect the assets of its Clients. For more information about Alper Services, visit www.AlperServices.com or call Todd Adams at 312-867-7353.