Re: Insurance and Brownfields

[Emery Graham <egraham@dca.net>]

Susan,

Thanks for the reply. I'm aware of the insurance products available to
facilitate brownfield deals. However my focus is on bring into play the
reserve
funds that are being set aside by the insurers to handle known and
potential E&A
liabilities. I've had experience negotiating Community Reinvestment Act
settlements(CRA) with major banks and find the idea of liability reduction
apparently applicable in the environmental liability arena, i.e., federal
government legislation, in this case Superfund, creates potential and actual
liability for business. The actions to most efficiently reduce or eliminate
the
liability call for cooperation, rather than litigation, between the various
parties. After reading A.M. Best, Standard and Poors, and the Insurance
Service
Organization's analysis of the insurance industries current and future E&A
liabilities, I've concluded that noone's counted in the millions that state
and
local governments have available in Economic Development, Community
Development,
and Capital budget  funding, not to mention the Banking Industries Community
Reinvestment Act funding to remedy the waste site problems. Just examine the
Federal, State, and Local government budgets for development. All of these
funds
can be combined with the E&A loss reserves and the asset value of the waste
site
land. The sum of these values, I suggest, exceed the estimates of potential
liability for E&A issues, i.e., by leveraging the E&A reserves with the other
funds available to do commercial development we might be able to fashion a
mechanism to clean up the waste sites, establish new businesses, reduce
insurer
liability, etc.

But let's move to the value of the commercial enterprises that might be
developed on these reclaimed sites. Don't insurance companies finance
development? Wouldn't PRP's be better off with an equity position in a
commercial development than a waste site liabilty on their books? What about
community benefits; public relations benefits, etc?

The potential benefits from such public/private partnerships certainly support
some conversation and brainstorming. What do you think?

Emery

Susan Neuman wrote:

> Emery:
>
>     With regard to your interest in insurance company financing strategies,
> were you aware that the new environmental insurance products can be used to
> settle environmental coverage litigation as well as Superfund litigation? Of
> course, the products are extremely useful in financing Brownfields
> redevelopment, according to the new HUD report on Environmental Insurance
> for Brownfields Redevelopment (I can e-mail you a copy if you don't have
> one).
>
>     One thing the report says which may interest you is that insurers should
> be included as stakeholders in Brownfields task forces or projects, but
> usually aren't. (I drafted the transaction section of the new ASTM guide to
> the process of Brownfields redevelopment, and did include insurers in the
> process).
>
>      My company, the Environmental Insurance Agency, is an environmental
> brokerage and risk management company which has been making these products
> available for Brownfields and Superfund  and coverage litigation
> settlements.  If you are interested in hearing more, our web site is at
> www.riskinsurance.com, and you might want to look at a couple of my articles
> on the new products which are on the web site.
>
>                                                                       Sue
> Neuman
>
> 914-834-3561
>
> susan_neuman@email.msn.com

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