The 2019 Environmental Power Brokers
Alexander Brown, Assistant Vice President, EPIC
“Just this year Alex [Brown] obtained for us a higher policy limit and realized premium savings versus expiring coverage and also obtained for us an additional $1 million limit for defense outside policy limits,” said one risk, finance and insurance manager.
Brown worked with regulators to draft the language, ensuring the site-pollution policy met financial responsibility requirements.
After that, Brown was able to “align the definition for responsible insured — the person responsible for reporting and disclosing — with our organizational structure,” said the insurance manager.
“He also expanded our asbestos and lead-based paint coverage to include coverage for inadvertently disturbed materials and obtained blanket language capturing third-party indemnities that were provided in leases and purchase agreements.
“And just for good measure, Alex limited the material change in use exclusion to account for our renovations and development exposure while maintaining meaningful mold coverage despite our insurer’s amended mold appetite.”
For another client, Brown “secured a competitively priced 10-year new and pre-existing conditions environmental policy that facilitated the closing of a shopping center,” said the company vice president.
“Alex secured coverage for the shopping center with known contamination from one historical dry cleaning operation and uncertainty on a second, with no exclusion for dry cleaning solvents. Alex incorporated custom language that allowed the cleanup costs coverage to dovetail with the state remediation program.”
Kimberly Mann, Vice President, Marsh
One of Kimberly Mann’s clients, a major academic institution, often receives donations of real estate. She was asked to conduct a risk assessment on the process to manage that property and made several important changes, said the insurance and loss-control manager.
“We were not doing the reports that she felt we ought to and she explained why those were important. She also found some toxic exposure that was an unknown pre-existing condition outside our known excluded.”
And just to show that even the best laid plans can’t cover every possible situation, the client had a minor exposure incident in the middle of a renewal that involved a change of carriers. “Kim was fabulous,” the manager said.
Another client acquired a large energy-processing site with a long history. “Kim got us covered both on a continuing operational basis but also for legacy issues,” said the risk analyst.
“It became almost a script: The project team would ask me, ‘Can we get this or that,’ and I would say, ‘Let me check,’ and Kim would say, ‘Oh sure!’ She was able to present our information in a way that the underwriters liked. It was collaborative. She was an advocate for us but did not try to stick it to the carriers.”
A third client has a separate, stand-alone program for environmental coverage: “We have unique exposures, and Kim was able to manuscript policies for our large, multiple sites,” said the senior risk manager. “That required incredible attention to detail in understanding the complexity of our multiple exposures.”
Kate Mead, Senior Vice President, Willis Towers Watson
After losing a major carrier as the primary incumbent, Kate Mead had to replace another $20 million in capacity at the second excess layer due to a treaty restriction of another incumbent player.
In the end, three new carriers were introduced to the program including a new partner on the primary layer. The program remained on a multi-year term, with expiring limits of liability, similar retention structures, matched coverage and only a modest premium increase due to a combination of additional exposures and claims experience.
“During the past year, Kate has done an excellent job in brokering two environmental policy renewals involving strategic government-owned sites operated by us,” said one director of risk management.
“Kate went the extra mile working with the local site personnel to fully understand each site’s unique risk exposures, communicate their individual risk profiles to the underwriters and craft cost-effective coverage.”
With underwriting submissions out to 17 insurers more than 100 days in advance of the renewal, Mead lead the formal marketing efforts with face-to-face client-carrier meetings with most of these insurers.
After months of intense negotiations, Mead and her team were able to secure a pollution legal liability program that met or exceeded all expiring coverage, maintained a multi-year policy term, and matched limit and retention structures. All with a significant premium savings. The policy was highly manuscripted and also satisfied the various regulatory and financial obligations.
Amber Walker, Vice President, Marsh
“The environmental coverage placement for my company was difficult to say the least,” noted one director of loss control. “It would be simple if all my company had to do was buy pollution coverage for above-ground fuel tanks, but the coverage Amber has placed for us is much more complicated.
She negotiated with the carrier to provide pollution insurance that covers animal waste, wet and dry, that is transported by third parties off site in addition to the tank coverage.
All of this with a seamless three-year policy renewal term. During two acquisitions this year she negotiated with the carrier to add the acquisitions with no additional premium. All stress free. She is a phenomenal broker.”
This was a particularly challenging renewal, because many markets have little to no appetite in the agricultural/livestock segment.
Adding to the challenge, the expiring policy included products-pollution coverage at third-party sites. Amber Walker approached 26 markets, the majority declined.
But the renewal resulted in products-pollution coverage, broadened coverage for sites with known pollution, broader transportation coverage, improvement in business interruption coverage and a 40 percent premium reduction.
In another case, Walker flipped the script, bringing a new carrier in the segment to an established client.
It was a complex program, one with claims still being sorted, that gave the underwriter pause. By walking both insured and insurer slowly through the process, Walker secured the placement and increased overall capacity in the segment.
Liza Webster, Senior Vice President, Marsh
“We faced a very challenging environmental circumstance in connection with an acquisition,” said one general counsel.
“Liza did a wonderful job of developing a very thorough understanding of the situation and provided our company with some creative potential solutions. She then communicated the circumstances and the desired plan to the insurance market.”
Without Liza Webster’s perspicacity, “I doubt our company would have moved forward with this acquisition.”
Another client concurred. “Liza was an incredibly important resource to us in connection with a recent property investment,” said one COO. “The investment involved a land purchase of more than 100 acres from a user who had contaminated the site over its 50-year ownership.
“The nature of the contamination is complicated, and our investment plans for the site call for remediation and redevelopment for mixed use.
We worked with Liza almost from the beginning of the process … to put in place pollution legal liability insurance coverage.”
Webster made sure the company conducted sufficient testing and had the documentation necessary to generate interest from the insurance markets and bind the coverage needed to satisfy joint venture partners and potential lenders.
“She took the time to educate us on the insurance markets and to educate the carriers on our property. Ultimately, she put us in the best position to obtain the best terms for the coverage we needed,” said the COO.
Max West, Senior Vice President, Aon
The emergent theme in the environmental category this year was brokers devising innovative approaches to provide pollution liability coverage to unlock redevelopment for industrial sites that have long languished because of legacy contamination.
One client of Max West’s had three such projects, all of which involved major industrial companies selling sites with known issues.
“Max helped us place pollution coverage as we assumed all liability, including toxic tort,” said one CEO. “The coverage met the requirements of the developers and the backers. It was very complicated, because our plan was to redevelop the site fully from demolition of the existing plant to subsurface remediation.”
At another site, waste ponds had to be drained and capped on a site of more than 1,400 acres. “Max placed the pollution liability and also excess indemnity,” said the CEO.
Another client gave similar testimony: “We had a very complex transaction in which a piece of industrial property was being sold,” said one attorney.
“That required indemnification and coverage for known conditions. The seller retained some and the buyer accepted some. We, the agents, also needed protection in case the indemnitors did not fulfill their obligation. Max made it all happen.”
In a third deal, the sellers were a financial company not well-versed in environmental law or science. “I did not know the lender, and I did not know the seller,” said a partner at the client. “Max saved us and the seller money and closed the deal.”