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Pollution
Insurance - Environmental Insurance Placement
RM
Solutions has recently placed a comprehensive Pollution Liability
Insurance policy on behalf of a Canadian real estate development
company that purchased a contaminated industrial site. The company
specializes in "brownfield" property redevelopment.
The
subject site was extensively characterized and certain areas were
required to be remediated due to high concentrations of metals.
The site was bounded by an environmentally sensitive "Area
of Natural and Scientific Interest". Testing indicated no signs
of widespread contamination in soil and groundwater.
Insurance Requirements
The
loan conditions of the purchase agreement required comprehensive
pollution insurance that would cap and guarantee all potential environmental
liabilities
Placement of Cover
The
Environmental Insurance market in Canada is limited to a very few
specialized insurers.
RM
Solutions' Strategy for Marketing the Risk was:
1) to demonstrate the experience of the developer. The developer
was a unique consortium of strategic partners with extensive environmental
expertise in areas of law, engineering and real estate planning.
2) to demonstrate the sound technical basis for the Remedial Action
Plan (RAP). The site had been thoroughly characterized and documented.
3) To obtain competitive quotes. Eight international markets were
identified, including two in Canada. The markets were provided with
A Summary of Site Conditions and Insurance Requirements. Five markets
were deemed qualified and sent detailed underwriting and technical
information to quote.
Each
insurer initially had numerous restrictions or limitations on their
offer of coverage. RM Solutions negotiated to obtain the key coverage
requirements and they were able to define the exact nature of the
pricing components and coverage limitations. As a result, the developer
was able to make informed decisions on the true costs vs. benefits
of all coverage options offered. The lending terms were revised
accordingly.
The
marketing strategy that RM Solutions implemented was successful
and ensured that the real estate transaction was completed within
a short time-period. The comprehensive cover was obtained with cost-effective
pricing that was 1/3 the price of other competing quotes.
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