2007 CPEO Brownfields List Archive

From: SusanNeumanEsq@aol.com
Date: 4 Jun 2007 17:25:35 -0000
Reply: cpeo-brownfields
Subject: Re: [CPEO-BIF] BCP Data Followup and Self-Directed Cleanups
 
Bruce,
 
Perhaps I shouldn't have mentioned Monte Carlo.  My experience is that, in order to properly underwrite cost overrun coverage, you essentially have to redo the whole process of estimating the cleanup costs based on very detailed information about costs and their relation to an approved remedial plan. Insurers frequently rely on outside engineering companies to do the re-analysis, which is expensive as well as time consuming. Underwriters previously used to provide the coverage for small sites under site pollution liability policies using a high deductible -- this is called "embedded cost cap coverage" -- but they are no longer allowed to do so by reinsurers because of the many hits that were taken under such policies since underwriters were providing the coverage based on insufficient information.  There is one company, AIG, that will provide embedded cost cap coverage but only in limited situations for certain clients and because AIG does not have to put all its losses under its reinsurance.
 
Basically -- and perhaps I should have made this clearer -- I just think that most cost cap underwriters would disagree that cleanups at large projects pose greater risks than those at small ones. They would say that, at least for them, the risks are just as high, if not higher because the small sites are seldom as well characterized as the large ones yet can be just as complex.  There is an answer to this problem, however; increasingly, insureds are obtaining guaranteed fixed price remediations to cover cost overrun risks, and purchasing SPL policies to cover the other risks.
 
Sue
 
Susan Neuman, Esq., Ph.D.
Environmental Insurance Agency, Inc.
138 Chatsworth Ave., Suite 2
Larchmont, NY 10538
914-833-5100 (phone)
914-833-5102 (fax)

www.enviroinsurance.com




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