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    EdG
    Environmental Risk Trends - Depends on the Topic and...
    Topic posted October 7, 2009 by EdGElite Contributor, last edited January 19, 2012
    574 Views, 4 Comments
    Title:
    Environmental Risk Trends - Depends on the Topic and Perspective
    Content:

    Environmental risk trends 2009 and a historically bad economy.  So what does environmental risk mean to you?  Whether you are are in real estate & due diligence, compliance, finance, insurance or a nonprofit, the economy has taken its toll and everyone has searched for how to adjust to the downturn in business/funding.

    Commercial real estate and real estate finance for property transfers was (and still is) particularly hard hit in this recession.  The Commercial Mortgage Backed Industry was the second leading source of all commercial real estate funding - then it all but shut down.  The significant to environmental risk?  Multi-fold.  CMBS commercial real estate transactions came to a halt and hence a hefty flow of Phase I environmental reports.  How are people financing properties and or dealing with the credit crisis as it relates to environmental risk?  Are environmental initiatives being 'tabled?'

    Insurance - Of course we all have heard about the push to become LEED certified or 'green buildings.'  What about the contract between the building owner (or bank) that says "I want a Silver LEED certification when my building is complete."  Did you know that insurance companies are providing specific endorsements to fill this "coverage gap" to your standard E&O policy?  Do you believe environmental insurance claims are likely to increase in a bad economy?

    Environmental Regulations, Laws & Policy - new storm-water regulations in the Northeast - particularly Massachusetts and New Hampshire are a hotly debated topic; Green Laws/Clean Energy is a big push at the federal and state level.  What are the trends in recent foreclosure and bankruptcy courts regarding environmental risk?

    Sustainability and "going green" seems to be the catchall phrase for every single solitary company under the sun.  But what does it really mean to have a 'sustainability plan' in place and in practice?  What does it mean for a company to 'go green?'

    Nonprofits - environmental advocacy groups are fundamental for the preservation, advocacy, education, and protection of our natural resources including rivers, wetlands, air, open spaces.  As evidenced in ERTG's Blog "Salem Harbor Power Plant: Case Study" the Conservation Law Foundation (CLF), a nonprofit law advocacy group that had a significant impact on lowering the toxic emissions of the Salem Harbor Power Plant.

    So what are the 'stewards of the natural resource' doing to drive fundraising during in these tough economic times?

    Serious questions for environmental trends ...  What are your thoughts?

    Comment

     

    • Ambrose
      posted October 15, 2009 by AmbroseMember

      Our business has grown despite the economy.  More insurance companies that do not have "stand-alone" environmental insurance products are interested in our environmental claims handling services.  It is probably a combination of making fiscally sound decisions (handling their environmental claims in a professional manner) and a heightened awareness of environmental risk.

      -Cliff Ambrose

    • DaveY
      posted October 15, 2009 by DaveYMember
      These are interesting questions.  I have wondered whether the state of the economy and property values would impact insurance claims related to environmental contamination.  I have not noticed an increase in claims made under pre-pollution exclusion era occurrence based commercial general liabilty policies.  Since those policies frequently raise coverage issues with respect to contamination and generally require third party suits this is not surprising.  However, I would suspect that some lenders or property owners might consider whether an attempt to trigger a claims made environmental policy could enhance the value of their respective interest in real property.
      -Dave Young
    • FormerGE
      posted October 15, 2009 by FormerGEMember

      On a corporate basis environmental risk was always a part of our business whether it be in acquisitions, manufacturing or legacy.  GE has always been a leader in corporate strategies and development and that extends to our launching of 'eco-imagination' in 2005 with a then $90 million ad campaign.

      However, where I have seen most environmental risk is from our previous manufacturing plants and acquisitions.  As part of the finance department GE would definitely look to our insurance programs to cover the risk under our general liability policies (that go back years).

    • Paul Duggan
      posted October 15, 2009 by Paul DugganMember

      As an environmental insurance broker for the past 20 years, I have not seen an uptick in claims since the economy went south. 

      The environmental insurance market now consists of about 30 insurers.  This is a dramatic increase and rumor has more carriers are about to jump in.  The competition is fierce and is driving down pricing.  Many of these carriers are chasing the same business that has historically been controlled by AIG, Zurich, or XL.  I am told AIG has lost about half their book (to the tune of $500MM).  Much of that business is going to the new carriers. 

      Regarding the legacy issue, many insureds are unaware their old liability policies fully cover pollution and since those polices are occurrance form, they can cover claims for as long as the limit of liability exists.  Many insureds and insurers are commuting these old policies.  The advantage of commutation is the insured gets their money now rather than gamble the insurer will be there when the claims arrrive (insurance company insolvency happens) and the insurer gets cost certainty from "buying back" their policies and ending any future liability.  Old CGL policies can be tremendous assets, yet many insureds are unaware of this.