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Allianz construction (part two) - Legislation, Risk Management and InsuranceGraeme Cross
After a tough recession, the construction sector is showing strong signs of recovery with the number of housing, commercial and infrastructure projects on the up. As activity increases, insurance has an important part to play in its future success.
Understanding the issues facing the sector and providing robust risk management advice to support growth, will be key for the insurance industry.
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insurance markets. The team is supported by Aon’s in-house claims specialists and engineers.
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The European Union Environmental Liability DirectiveGraeme Cross
The Environmental Liability Directive (2004/35/EC) is
a legislative act of the European Union creating new
and significant potential liabilities for costs, damages
and losses for operators and companies regulated
by the ELD. All EU members have now adopted the
ELD into their national laws, making compliance
unavoidable for companies operating in EU member
states regardless of where they are headquartered.
Allianz construction (part two) - Legislation, Risk Management and InsuranceGraeme Cross
After a tough recession, the construction sector is showing strong signs of recovery with the number of housing, commercial and infrastructure projects on the up. As activity increases, insurance has an important part to play in its future success.
Understanding the issues facing the sector and providing robust risk management advice to support growth, will be key for the insurance industry.
This, the second White Paper in our two part series on construction, takes a look at some of the associated regulatory changes and risk management topics, highlighting the insurance related issues.
Aon’s energy team in London consists of around 150 dedicated professionals. Working seamlessly with Aon marine and energy specialist colleagues in 120 countries, we deliver expert programme design, advice and placement with global and local
insurance markets. The team is supported by Aon’s in-house claims specialists and engineers.
What's wrap up insurance and do i need it FernandoCourts
Wrap-up insurance is the ideal liability policy that guarantees your coverage incorporates everything you need on those multi-million-dollar jobs. If you are primed to take on significant projects, it's time to start considering wrap-up insurance.
The European Union Environmental Liability DirectiveGraeme Cross
The Environmental Liability Directive (2004/35/EC) is
a legislative act of the European Union creating new
and significant potential liabilities for costs, damages
and losses for operators and companies regulated
by the ELD. All EU members have now adopted the
ELD into their national laws, making compliance
unavoidable for companies operating in EU member
states regardless of where they are headquartered.
Environmental insurance, types , advantages and disadvantages, limitations an...Home
Environmental insurance is a type of insurance that protects businesses from the financial consequences of environmental damage. This can include pollution incidents, contaminated property, and regulatory fines. Environmental insurance can be a valuable tool for businesses of all sizes, as it can help to protect their financial bottom line and reputations.
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International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
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Discussion Question For this week’s assigned reading, you were t.docxelinoraudley582231
Discussion Question: For this week’s assigned reading, you were to select one of the 16 sector specific plans associates with a critical infrastructure sector of your choosing. For this week's forum report, tell us which critical infrastructure plan you read and explain the vital role the private sector plays carrying out the objectives of this document.
Instructions: Fully utilize the materials that have been provided to you in order to support your response. Your initial post should be at least 350 words. Please respond to at least two other students.
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In previous lessons, we have examined how the nation’s 16 critical infrastructure sectors come to bear upon risk at the national and local levels of government. Since the private sector owns and/or operates the vast majority of this infrastructure, no discussion of risk to our nation or to our communities is complete without bringing this tremendous asset into consideration. The private sector plays a tremendous part related to risk, as it can be a contributor to it, as well as an aid in lessening its impact. In addition, the manner in which the private sector withstands and recovers from disaster events is a significant determining factor in the resiliency of our local communities, and of our nation as a whole. This week, we look at the integral role that the private sector plays in the determination of risk. We will do this in light of the six strategic challenges that have been noted previously, and within the parameters of the nation’s 16 critical infrastructure sectors.
So what defines or makes up the private sector? According to DHS, it includes “businesses, industries, private schools and universities” that are essential components of our communities, and are expected to carry out a wide range of critical roles (DHS, 2014, p. 91). As mentioned previously, the lion’s share of the nation’s infrastructure is owned or ran by the private sector; and therefore, it is responsible for the immediate security of its facilities, associated property, and for employee safety. In most cases, there is a working relationship that has been established between the private and public sectors; and this can be seen at both the local national levels. This partnership has always existed to one degree or another, oftentimes carried out in a very casual, unstructured manner. Yet, with the introduction of the National Preparedness System in late 2011, the formulation and operation of these relationships has become more structured. Yet, as highlighted in the 2013 National Infrastructure Protection Plan, benefits must be provided to all partners if the relationship is to be an effective one. The value proposition as it relates to government is quite clear, in that coordinating with infrastructure stakeholders has a direct impact upon preserving public safety and ensuring national security. Therefore, it is up to government at all levels to recognize.
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(2) The types and features of insurance products available for project risk mitigation
(3) The best practices and examples of special insurance clauses for large construction projects
The presentation aims to provide a practical guide for project managers, contractors, consultants, and insurers who are involved in or interested in large construction projects. It will also offer insights into case studies.
A surety bond is a financial instrument through which an insurance company guarantees the successful performance of an Aon
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In previous lessons, we have examined how the nation’s 16 critical infrastructure sectors come to bear upon risk at the national and local levels of government. Since the private sector owns and/or operates the vast majority of this infrastructure, no discussion of risk to our nation or to our communities is complete without bringing this tremendous asset into consideration. The private sector plays a tremendous part related to risk, as it can be a contributor to it, as well as an aid in lessening its impact. In addition, the manner in which the private sector withstands and recovers from disaster events is a significant determining factor in the resiliency of our local communities, and of our nation as a whole. This week, we look at the integral role that the private sector plays in the determination of risk. We will do this in light of the six strategic challenges that have been noted previously, and within the parameters of the nation’s 16 critical infrastructure sectors.
So what defines or makes up the private sector? According to DHS, it includes “businesses, industries, private schools and universities” that are essential components of our communities, and are expected to carry out a wide range of critical roles (DHS, 2014, p. 91). As mentioned previously, the lion’s share of the nation’s infrastructure is owned or ran by the private sector; and therefore, it is responsible for the immediate security of its facilities, associated property, and for employee safety. In most cases, there is a working relationship that has been established between the private and public sectors; and this can be seen at both the local national levels. This partnership has always existed to one degree or another, oftentimes carried out in a very casual, unstructured manner. Yet, with the introduction of the National Preparedness System in late 2011, the formulation and operation of these relationships has become more structured. Yet, as highlighted in the 2013 National Infrastructure Protection Plan, benefits must be provided to all partners if the relationship is to be an effective one. The value proposition as it relates to government is quite clear, in that coordinating with infrastructure stakeholders has a direct impact upon preserving public safety and ensuring national security. Therefore, it is up to government at all levels to recognize.
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Introduction
Willie Nelson net worth is a testament to his enduring influence and success in many fields. Born on April 29, 1933, in Abbott, Texas. Nelson's journey from a humble beginning to becoming one of the most iconic figures in American music is nothing short of inspirational. His net worth, which estimated to be around $25 million as of 2024. reflects a career that is as diverse as it is prolific.
Early Life and Musical Beginnings
Humble Origins
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Rise to Stardom
Breakthrough Albums
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Iconic Songs
Willie Nelson net worth is also attributed to his extensive catalog of hit songs. Tracks like "Blue Eyes Crying in the Rain," "On the Road Again," and "Always on My Mind" have become timeless classics. These songs have not only earned Nelson large royalties but have also ensured his continued relevance in the music industry.
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Television Appearances
Nelson's char
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Environmental insurance market status Q1 2017
1. Risk. Reinsurance. Human Resources.
Environmental Insurance
Market Status
Q1 2017
Aon Risk Solutions
Environmental
2. Aon Risk Solutions Q1 2017 Environmental Insurance Market Status i
This paper provides an update on the status of the marketplace
for environmental insurance as of early 2017. It starts with a
look at the environmental risks associated with a number of
common industrial, commercial and institutional activities, and
then considers various aspects of the marketplace, with a look
at the insurance companies that sell environmental coverage, a
review of who buys it and what is new in the market for this year.
The Nature of Environmental Risks
Environmental risks are all around us, but are often
unrecognized by business owners. In fact, there are more than
30,000 spills of hazardous materials every year in the United
States and most of them do not involve chemical companies or
hazardous waste disposal sites. Extending this to a global view,
spills are much more common in nations where environmental
regulations are not fully implemented and enforcement is less
stringent than in the U.S. and other industrialized societies.
Many environmental exposures are associated with relatively
low risk activities including ownership of real estate, retail
marketing, farming, and a variety of manufacturing and
distribution businesses. Examples of some common sources of
environmental claims are shown to the right:
• Leaking underground Storage Tanks can
pollute soil and groundwater at industrial,
commercial and residential sites
• Hazardous chemicals must be properly
handled, stored and disposed of in order to
prevent spills and releases of contaminants
• Windstorms and floods can wash hazardous
materials into rivers or contaminate
downstream properties
• Accidents involving vehicles, vessels and trains
can cause spills that result in contamination
and/or fires
• Climate change has been noted as a global
phenomenon that has impacted agriculture,
manufacturing and the lives of families around
the world
• Relatively benign real estate accounts can
result in serious environmental events as this
mold contamination in a residential property
demonstrates even where safety measures
are implemented to protect people and
the environment, human error can result in
releases that are catastrophic
Introduction
This report looks at the use of environmental insurance as
a risk management tool and assesses its value as a means to
finance future losses. It also considers insurance as a tool to
support and foster continued development of technologies
where risks are present and/or not fully understood.
4. Aon Risk Solutions Q1 2017 Environmental Insurance Market Status 1
What is Environmental Insurance?
The environmental marketplace provides a wide
variety of insurance products tailored to protect
organizations and individuals from pollution risks
that involve everything from releases of extremely
dangerous chemicals to the presence of mold in
apartment buildings. The type of policy that is
appropriate for a specific client depends on the
types of risks associated with the insured operations
and activities, as well as the requirements that may
be imposed by third parties such as lenders.
Site-specific insurance products offered by
environmental markets, commonly referred to
as Pollution Legal Liability (PLL) policies, provide
claims-made coverage for risks related to ownership,
management or operation of properties. Insured
risks include property damage caused by spills
from industrial, commercial or institutional facilities
where hazardous materials are stored, used or
generated as byproducts of operations. Risks also
include bodily injury from exposure to or contact
with hazardous materials or unhealthy indoor and
outdoor environments. Injuries or damage may occur
to persons or property on or off insured premises.
Releases of hazardous materials can also result in
regulatory requirements for responsible parties
to clean up and remediate pollution conditions to
achieve allowable concentrations of contaminants
in soil, groundwater, sediments and other media.
Cleanups can be required on insured premises or
from the properties of others where pollutants have
migrated from an insured property or operation.
Environmental insurance policies typically respond
to third-party claims for bodily injury, property
damage or remediation of pollution conditions.
Policies today have been broadened to include
first-party (onsite) cleanup costs and business
interruption where lost time is a result of a pollution
condition. Diminution of property values where
contaminants have affected real property can also
be insured in current PLL policies. Generally, any
classification of industrial, commercial or institutional
risk is eligible for these products. PLL coverage
can be written for a single site or a portfolio of
properties, including policies specifically tailored
to lenders. Coverage is available for new and
historical pollution conditions arising from both
sudden and gradual releases of contaminants.
Environmental coverage for general, trade and
remediation contractors is commonly referred to
as Contractor’s Pollution Liability (CPL) insurance.
CPL policies are written on both claims-made and
occurrence forms that respond to third-party claims
arising out of the “covered operations” of the
insured contractors. Nearly every type of contracting
activity can be insured on a CPL policy and coverage
can include protection for both construction risks
and for claims arising out of completed operations.
CPL Policies respond to third party claims for bodily
injury, property damage, and remediation costs. This
coverage can be written on a project-specific basis
or as a practice policy, which insures all operations
performed by an insured contractor during a policy
year. Project-specific policies can be written for
multi-year terms and include coverage for completed
operations that extends beyond the date when all
work at a jobsite is finished. Where CPL policies
are written on individual projects they may insure
a single contractor or all contractors performing
construction services related to the specified project.
Combined general and pollution liability are
also offered to manufacturers and contractors by
environmental underwriters. These products can
provide both commercial general liability (CGL) and
pollution liability coverage in a single policy form.
Where contractors are also engaged in engineering,
consulting or other technical work, combined forms
may include coverage for professional liability as
well as contractor’s pollution and CGL risks.
5. Aon Risk Solutions Q1 2017 Environmental Insurance Market Status 2
Risks associated with leaks, or spills involving
underground storage tanks (USTs) may be insured
on site-specific PLL Policies or on separate insurance
policies specifically designed for just UST risks.
Underground storage tank policies can provide
owners and operators of commercial USTs protection
for cleanup and liability claims arising out of releases
from insured tanks. These policies may also be used
to satisfy requirements for financial responsibility
imposed by state and federal regulations. Insured
tanks typically must meet minimum requirements
for protection features and require periodic
testing in order to certify their compliance.
Types of Environmental Insurance and Target Purchasers
Types of Insurance Target Industries*
PLL • Real Estate Portfolios
• Light/Heavy Industry Manufacturing
• Hospitality
• Healthcare
• Oil Gas
• Academic
• Municipalities, Public Entities Airports
• Landfills
• Food/Agricultural Industry
• Mining
CPL, Owners/Contractors Protective • General Contractors
• Trade (Specialty)
• Environmental Remediation
• Project Owners
Combined GL/PLL • Manufacturing
• Chemical Blending/Distribution
• Fixed Facility Operations
• Most other Operations that Purchase PLL Policies
Combined Professional/CPL • General Contractors
• Trade (Specialty) Contractors
• Environmental Remediation Contractors
UST • Service Station Operators
• Communications
• Fuel Storage Terminals
• Waste Treatment/Storage
• Airports and FBOs
Remediation Stop Loss • Contractors with Fixed-Price Remediation Contracts
• Owners, Developers or other Responsible Parties with Small Well-Defined
Cleanup Projects
Lender’s Collateral • Banks/Lenders with Broad Portfolios of Property Loans
*may not be limited to the mentioned industries; eligibility varies by carrier
6. Aon Risk Solutions Q1 2017 Environmental Insurance Market Status 3
Who Sells Environmental Insurance?
The Environmental insurance marketplace is
now saturated with entrants offering high limits,
a variety of products and a wide breadth of
coverage. With this competitive landscape and
unfamiliar coverage forms, competent brokers
can be an effective means of accessing the
marketplace and negotiating favorable terms and
conditions in environmental insurance policies.
Of course, all environmental insurers are not alike
in terms of their abilities to offer a broad range of
products, and in their appetites to write specific kinds
of environmental risks. In order to better understand
the insurance companies that write environmental
insurance it is helpful to look at the market in
segments that characterize the types of insurers that
are active today, and to look at the products these
companies write within their market segments.
Conventional or Standard Environmental Markets
constitute A.M. Best “A-rated” carriers with capacities
of up to $50 Million per product line. These
markets include AIG, ACE, Allianz, Arch, Aspen,
AWAC, Axis, Beazley, Berkley, Berkshire Hathaway,
Catlin, Chubb, CNA, CV Starr, Great American,
Ironshore, Liberty, Navigators, Philadelphia / Tokio
Specialty, Travelers, XL and Zurich. As leaders in the
Environmental marketplace, these carriers write a
broad spectrum of pollution products, including
Site-Specific Pollution Legal Liability, Contractor’s
Pollution Liability, Combined Professional and
Contractor’s Liability and Storage Tank policies.
Many of the major markets also have the ability to
write General and Pollution Liability coverage on
combined policy forms (as discussed above). Zurich
also writes coverage for financial institutions known
as Secured Lender or Collateral Protection insurance
that provides protection where pollution conditions
affect properties that are the collateral for bank loans.
Specialty Markets are accessed through environmental
wholesalers and can provide Aon clients specialty
products and expertise offered through proprietary
markets. Companies that typically can be accessed
only through wholesalers include Aegis, Alterra,
AXA, Colony, Crum Forester, Everest, Gulf, ISO,
James River, Markel, New Century Surety, One
Beacon, and Rock Hill. Products that are often sought
in the wholesale marketplace are mono-line mold
abatement, UST programs for association members
and blended General Liability/ Pollution policies.
Some companies handle only pollution exposures
for service stations, country clubs, pest applicators,
and owners of small businesses. These Specialty
Market insurers typically have smaller minimum
premiums than the larger companies and can make
coverage available to a segment of industry that
would otherwise not find environmental coverage
cost-effective in their risk management programs.
Carrier Capacity Per Policy (in Millions)
Millions
Construction risk limit capacitySite specific limit capacity
$0
$10
$20
$30
$40
$50
Zurich
XL
Catlin
Starr
N
avigator's
Liberty
Ironshore
G
reatAm
erican
(1)
Chubb
Beazley
Berkley
AW
AC
AXIS
Aspen
AIG
(1) $100M Agg
7. Aon Risk Solutions Q1 2017 Environmental Insurance Market Status 4
Who Buys Environmental Insurance?
Overview by Industries
The chart below indicates industry groups that
purchase environmental insurance from Aon. As
can be seen from the chart, the construction field
is the leading category among those purchasing
environmental coverage, accounting for 28% of
policy placements through Aon’s Environmental
Services Group. This is followed by natural resources
(oil, gas and extractive industries) with 19% and
Industrials and Materials at 8%. Pharmaceuticals
and chemicals and Real Estate represent 7% each,
respectively of the environmental premiums placed
by Aon. As environmental insurance has become
widely accepted as a necessary component of risk
management programs, Aon’s insurance placements
have grown to include a wide variety of industrial,
commercial and institutional categories that would
not have appeared in this chart ten years ago.
Insurers have responded to the demands of these
purchasers by developing specialized environmental
products, which provide coverage that is tailored to
their needs. Many of these custom programs include
coverage for both general and pollution liability
risks in a single policy form. Environmental insurers
provide special programs for healthcare, educational,
chemical manufacturing, life science, energy
companies, and several other classes of business.
Premium by Industry
Pharm-Chem
7%
Transportation
1%
Public Sector
2%
Technology
1%
Railroads
2%
Agribusiness and Food
3%
Aviation
0%
Construction
28%
Financial
7%
Industrials
Materials
8%
Natural Resources
19%
Consumer
Goods
3%
Entertainment
1%
Health Care
1%
Marine
1%
Misc. General
Industry
5%
Professional
3%
Real Estate
7%
8. Aon Risk Solutions Q1 2017 Environmental Insurance Market Status 5
Environmental and Construction
Professional Market Status – Q1 2017
Overall Appetite Capacity
While the environmental insurance market
experienced changes in appetite and capacity
in 2016, overall, Aon clients continue to benefit
from favorable conditions in the environmental
marketplace with broad coverage and competitive
pricing. Consolidation of carriers has reduced the
available capacity for risk from a single carrier. In
addition, previously wholesale-exclusive carriers
(including Everest and Endurance) are entering
the retail brokerage arena. Total market capacity
remains above $300M; however the departure
of a major insurer and the consolidation of
others have changed the landscape for 2017.
Of particular impact is AIG’s withdrawal from its
mono line site-specific environmental liability
product. Aon is working diligently with other
interested carriers, as well as AIG, on all aspects
of existing placements, including outstanding
claims. AIG has been generally cooperative in
continuing to service in-force policies; some
exceptions being mid-term acquisitions where
they attempt to restrict coverage. Because of these
exceptions, some Aon clients are reconsidering
continuing AIG coverage through expiration and
rewriting with another insurer. With former AIG
senior management and underwriting talent now
employed by several different established and new
markets, movement of these policies is eased and
expedited. Ultimately, our clients still benefit from
our existing relationships furthering their cause.
Certain environmental insurers have revised
combined CGL/pollution and site-specific pollution
liability forms with more restrictive terms than
prior versions. We are working through wording
challenges with these carriers and using alternative
markets to preserve important coverage features
for clients where necessary. Additionally, carriers
are restricting coverage for microbial matter,
particularly for risks in the hospitality sector
where losses continue to escalate. Managing
expectations in this area, we are turning the focus to
preventative measures, including robust operations
and maintenance practices and loss mitigation
protocols for clients, with the goal of helping
underwriters feel comfortable relaxing restrictions.
Site-Specific Environmental Coverage
Rates are tightening somewhat for site-specific
environmental coverages, particularly coverage
for redevelopment properties impacted by
historical industrial operations. For the West
Coast Region in particular, Aon is seeing a
significantly increased pricing and underwriter
scrutiny from insurers on both redevelopment
sites and large portfolio programs that include
properties slated for redevelopment. Nationally,
carriers are requesting more environmental
underwriting data on lower risk profiles.
Mergers Acquisitions
The environmental market has been more cautious
providing coverage for transactions involving
mergers and acquisitions that traditionally looked
to ten-year policy terms, especially where industrial
sites are being insured. A few long-standing,
traditional market leaders will no longer write
these risks for new and pre-existing pollution
conditions with terms of more than three to five
years. In addition to shortening policy terms,
mature environmental markets are: (1) less willing
to offer limits exceeding $25 million; (2) requiring
newer environmental due diligence information;
and (3) restricting coverage on properties
slated for development or redevelopment
activities. Conversely, several newer markets
are becoming more aggressive in this space.
Energy Transportation
Environmental coverage for energy-related risks
remains in demand, especially for firms involved
in production of oil and/or natural gas from shale
formations by hydraulic fracturing (fracking). A
limited number of environmental insurers have
continued to provide coverage for these risks and
offer programs for contractors active in production
9. Aon Risk Solutions Q1 2017 Environmental Insurance Market Status 6
and extraction activities as well as investors
providing capital to these companies. However,
capacity in this space is substantially constricted
since AIG stopped writing environmental site liability
risks. Another carrier recently cut capacity on energy
risks from $25M to $10M. We are monitoring this
development to see if other insurers follow suit.
Environmental markets have suffered several large
losses from the midstream sector on pipeline and
marine terminal risks. Retentions for terminals and
pipelines are being re-evaluated; clients with adverse
loss histories often see significant premium increases.
Environmental insurers have typically provided
contingent transportation coverage for all
types of commercial and industrial exposures,
and this coverage remains available to the
energy sector. However, due to derailments
of trains carrying crude oil, underwriters are
cautious and imposing higher retentions,
especially for transportation in remote areas.
Recent events have sparked strong interest in
environmental coverage for transportation-related
cleanup and third-party claims from transporters,
freight forwarders, and railcar owners. Aon
introduced a specialized environmental insurance
product for the catastrophic pollution risks of
the rail industry. Cantilever Excess Pollution
Liability Insurance provides additional capacity
excess of standard general liability and marine
coverage forms for sudden and accidental
pollution from spills involving shipments by rail.
Financial
We are seeing renewed interest in environmental
risk transfer products from financial institutions,
commodity traders, investment bankers, and
private equity firms as they continue to expand
their insurance programs to include environmental
insurance covering investment activities as well as
operational risks. Industrial and commercial clients
have sought increased environmental insurance
limits in light of growing revenues and restored
risk management budgets along with increased
concerns related to environmental exposures.
Middle Market
Combined environmental and general liability
policies continue to be a popular option for
middle-market clients, particularly manufacturers
and distributors of chemical products and other
goods that involve environmental exposures,
including products pollution typically excluded
from traditional casualty programs. These combined
policies may offer less robust environmental
coverage than separate site-specific pollution
policies, creating an opportunity for Aon to
provide additional consultative advice with
respect to the placement of both pollution
liability and CGL policies. Many of our middle-
market clients with higher environmental
risks do purchase both policies separately.
Solutions for Companies of All Sizes
Aon’s market strength and relationships assures that clients can obtain the environmental risk transfer they
need whether programs are placed with insurers with a 30-year market tenure or underwriters new to the
segment. With Aon’s Structured Portfolio Solutions (SPS), clients benefit from a unique combination of
competitively priced coverage and services from select Aon insurance partners.
The enhanced forms and special rating programs enable smaller clients to obtain “best-in-class” coverage
that is not available from other sources. Middle-market buyers may also find the coverage features of the
SPS program attractive, though some prefer to purchase more tailored forms with enhancements specific to
their industry group or individual environmental risks. For larger clients, Aon continues to offer manuscripted
environmental insurance programs utilizing broad coverage forms and highly-negotiated policy language.
10. Aon Risk Solutions Q1 2017 Environmental Insurance Market Status 7
International Exposures
More U.S. corporations with foreign operations are
seeking to purchase international environmental
insurance policies to address risks associated with
activities outside of the U.S. Locally-written policies,
integrated with global environmental insurance
programs, help these clients address complex
requirements of risks associated with the wide
variety of regulatory and enforcement regimes
around the world. Compulsory environmental
insurance requirements are becoming more
common in European Union nations as well as the
Far East. China now requires pollution coverage in
some provinces where locally issued policies must
be placed with state-related insurance entities,
although enforcement of these laws varies greatly
from one region and one local authority to another.
On 7/1/2016. Korea promulgated the Act on Liability
and Relief for Damages from Environmental Pollution
(Damage Relief Act), which imposes strict liability
for environmental damage and requires certain
facilities to purchase environmental insurance from
a monopoly consortium of locally licensed insurers.
Underground Storage Tanks
Underwriting guidelines for older underground
storage tanks (USTs) have become significantly more
stringent with some clients finding it hard to insure
tanks that are more than 30 years old. The fallback
positions of carriers offering pollution coverage for
tanks is to either exclude these USTs or increase
retentions, which in many cases are now $250,000
or more. Insuring dry cleaning operations, even at
hospitality locations, is also becoming problematic
with many environmental insurance markets. Aon
has the expertise and marketplace clout to work
with clients and carriers to provide solutions for
even the most difficult environmental risks.
Indoor Air Water Quality
Recent news is stimulating interest from hospitality
and healthcare clients seeking coverage for
environmental risks linked to indoor air quality.
Incidents like the accidental pesticide poisoning
of resort guests in the U.S. Virgin Islands, as well
as outbreaks of legionella, MERS and Ebola, have
prompted risk managers to look for coverage to
manage these risks. Several markets have updated
forms to address increased client demand, refining
policy definitions to include viral and microbial
causes of losses including disinfection expenses.
We are, however, seeing a change in underwriting
criteria for mold/microbial matter coverage,
particularly for the hospitality industry. Underwriters
are imposing sub-limits and increasing retentions
and/or adding per-room retentions in an effort to
focus the insured on appropriate maintenance/
loss control protocols and mitigation strategies.
In addition, following the Flint Michigan water crisis,
social media is exploding with information and
misinformation about water quality. This national
scrutiny has created interest in environmental
coverage from our public entity clients and
prospects. It has also spurred at least one major
carrier to implement a corporate directive
limiting coverage for water risks, particularly
lead. Aon Environmental Services Group (ESG)
continues to provide market solutions for water,
including extensions for pollution products
liability on our customized policy forms.
11. Aon Risk Solutions Q1 2017 Environmental Insurance Market Status 8
Construction
Rates for contractor’s pollution liability coverage
remain very competitive for activities ranging from
general and trade contracting to participation in
large infrastructure projects delivered through
public-private partnerships and integrated delivery
programs. New insurers that have entered this
marketplace are already filling the capacity gap
created by the mergers of other carriers. We
are also seeing an increase in activity of general
construction projects throughout the United
States and a steady flow of opportunities on
high-rise residential and mixed-use projects
in major cities in all regions of the country.
ESG’s Construction Professional Team designs,
implements and services insurance programs
that protect our clients from claims arising
from construction project-related professional
services. More often than not these professional
coverages are placed in conjunction with
contractor pollution liability and/or owner’s
site pollution liability programs.
For more than 10 years, the insurance marketplace
has worked to keep pace with changes in the
complex project development segment of the
contracting industry. Today, insurers continue
to refine their professional and environmental
liability products as project delivery systems
evolve. For contractors, developers and property
owners, the two most commonly purchased
policies are Contractors Professional Protective
Indemnity (CPPI) and Owners Professional
Protective Indemnity (OPPI) policies.
OPPI and CPPI policies are available only on
claims-made forms. Project-specific policies are
typically written for a term of up to ten years for
both the construction and completed operations
periods. Corporate practice policies are renewed
annually. Limits of up to $50 million per claim
are available from single insurers. Layered
programs may use follow-form excess policies to
provide limits of up to $150 million or more.
OPPI and CPPI Policies have been available for more
than 10 years, but are still being tested in claims
situations that are increasingly complex. Policy
forms of various insurers have many similarities,
but new innovations are being introduced as
the demands for specific coverage features
expand. Such innovations include limited insuring
agreements for network security, and, following
the lead of pollution insurance counterparts,
including defense outside the base policy
limits for third party professional coverage.
Currently about a dozen markets are active in
providing these policies; all also provide pollution
insuring agreements either on the same or separate
policies. Many of these insurers have entered this
market in the past three years and their ability to
successfully write professional liability coverage for
contractors for the long term remains uncertain.
With a number of new entrants in the professional
liability market, rates have been competitive, but
professional liability coverage is not inexpensive
even in a competitive market environment.
Losses tend to be relatively infrequent, but
they can be large when they do occur.
12. Aon Risk Solutions Q1 2017 Environmental Insurance Market Status 9
Contacts
John Welter
Practice Leader
Executive Vice President
832.476.5730
john.welter@aon.com
Veronica Benzinger
Chief Broking Officer
Managing Director
561.253.2514
veronica.benzinger@aon.com
Daniel Sisler
National Sales Leader
949.608.6302
daniel.sisler@aon.com