Pollution Insurance

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.