Chris Bunbury, eS environmental Strategist, Inc. Email: [email protected] Phone: (231) 256-2122 Fax:...

Chris Bunbury, eSenvironmental Strategist, Inc.Email: [email protected]: (231) 256-2122Fax: (231) 256-2123PO Box 1127Leland, MI 49654www.EnvironmentalRiskManagers.com

WELCOME

ENVIRONMENTAL RISK MANAGEMENT AND

INSURANCE STRATEGIES TO LEVERAGE YOUR GROWTH AND

PROFITS

Assist client's on environmentalefficiency to drive their growth and

profits

(eS)

• Today we will discuss a variety of field tested and proven environmental strategies.

• Environmental strategies you will be able to seamlessly blend into your current business strategy to leverage your growth and profits.

• Through this process you will become a strategic partner and trusted advisor to your clients while better protecting your E&O exposure.

Today’s Agenda

1. Review why environmental exposures impact every business

2. Environmental liability insurance general discussion and product review

3. Environmental liability exposures impacting your client’s / prospect’s

4. Green insurance coverage’s

5. Development and execution of an environmental Management Strategy (eMS)

What is a pollutant?Page #2

A material, substance, product…. introduced to an environment for other than its intended use / purpose.

Fresh water

Cheese, Milk, Beer

EVERY BUSINESS IS IMPACTED BY

ENVIRONMENTAL EXPOSURES

Management consulting firm A. T.

Kearney studied companies with strong

commitment to sustainability, comparing

their performance with industry averages.

In 16 of the 18 industries studied, those

companies committed to sustainability

outperformed industry averages by 15%.

SUSTAINABILITY IS A RISING SOCIAL VALUE

AND THEREFORE A BUSINESS

OPPORTUNITY

If a business waits until an environmental problem occurs and any

governmental body gets involved, the cost to address the environmental problem will increase

on an average of 35% to 50%

Environmental Liability Exposures

• Purchasing raw materials

• FOB point of shipment?

• FOB point of delivery?

To be sustainable / transparent you start with risk management

• Love Canal, Niagara Falls NY 1978

• Al Gore

• Lead Laced Toys, Cadmium Jewellery,

Dry Wall… from China

• Wal-Mart and Home Depot

Growing Environmental Awareness Creates

Transparency

Creating Environmental Awareness

Sarbanes Oxley (SOX)

Financial & accounting disclosure

information of which environmental

liabilities / costs must be included


SAB 92 Ruling

SEC requires publically traded companies to

recognize, measure and disclose their

environmental liabilities to share holders. It also

requires additional disclosures of material effects

of regulatory compliance on capital expenditures,

earnings and competitive position.


FIN 47Financial Accounting Standards Board Interpretation No. 47, "Accounting for Conditional Asset Retirement Obligations (AROs): requires companies to recognize and report liabilities associated with the retirement of long-lived assets, including environmental cleanup and disposal obligations in connection with the retirement of contaminated property, plants and equipment


GASB 49Impacts U.S., state and local governments in addressing accounting and financial reporting standards for pollution (including contamination) remediation obligations. The obligations require the governmental entity to address the current or potential detrimental effects of existing pollution by participating in pollution remediation activities such as site assessments and cleanups.


Storm Water Runoff

occurs when precipitation from rain or snowmelt

flows over the ground. Storm water can pick up

debris, chemicals, dirt, household hazardous

waste, pathogens and other pollutants and flow

into a storm sewer system or directly to a lake,

stream, river, wetland, coastal water or

neighboring property. (Home Depot / Wal Mart)


Vapor Intrusion

from contaminated soil and groundwater into

structures can potentially create significant liability

and have a material impact on property value.

Vapor intrusion is a concern for property owners,

prospective purchasers and environmental

professionals conducting due diligence.


Brownfields

Sites that are underutilized or not in active

use, on land that is either contaminated or

perceived as contaminated. The term

"Brownfield" is used to distinguish these

sites from "Greenfields," undeveloped land.(Brownfields are like an annuity for agents)


ISO 14000

is a standard for environmental management

systems that is applicable to any business,

regardless of size, location or income. The aim of

the standard is to reduce the environmental

footprint of a business and to decrease the

pollution and waste a business produces.

EnvironmentalAcronyms And Terms

eS Seminar Page 2

AAI

All Appropriate Inquiry

Update of ASTM Phase I and Phase II

standards

Innocent land owner defense

AST

• Aboveground Storage Tank

A tank is considered underground if:

• 10% or more of its volume including

associated piping is underground, you

have an underground storage system

• By law, you must evidence financial

assurance for a regulated underground

storage tank system

UST Financial Assurance

• Self Insure• Letter of Credit• Bond• UST Insurance

BEA

• Baseline Environmental Assessment• Identifies the current baseline

environmental condition of a property• Allows you to identify liable parties (new

from old)• Offers protection/indemnification for new

land owner (only protects you from

the government)

BEA Categories• Category N: No significant hazardous

substance use by the new owner or

operator• Category D: The hazardous substances to

be used will be different from the existing

contamination• Category S: The hazardous substances to

be used will be the same as the existing

contamination• Filing an improper BEA is a felony and can

cost up to $25,000 per violation• Who are you doing business with?

CAA Clean Air Act

Air and water issues are the driving factors in environmental regulations

CERCLAPage #3

• Comprehensive Environmental Response, Compensation and Liability Act

• Superfund

• Joint, Strict and Several Liability

• You own your manifested waste from cradle

to grave

CNS

• Covenant Not to Sue

• No Further Action letter (NFA)

• Only protects you from the

government

• Only protects you from identified

contaminants

MTBE

CWAClean Water Act• 80% of the worlds fresh water is used

for agriculture• Agricultural runoff accounts for

roughly 70% of

contamination in our waterways• Coal-burning utilities account for 30%

of

mercury in our waterways• Stormwater runoff• Pharmaceuticals

EPAPage #4

• Environmental Protection Agency

• www.epa-echo.gov/echo Fines

& Penalties

•www.epa.gov/enviro/

Companies with known

environmental exposures

http://www.epa-echo.gov/echo

http://www.epa.gov/enviro/

ESA• Environmental Site Assessment

(Phase I & II)• Endangered Species Act• Roughly 1,200 endangered species• Environmental site assessment does

not

include endangered species

assessment• Neighbouring properties can be

affected if they could impact an

endangered species

HAZWOPERPage #5

• Hazardous Waste Operations and Emergency Response

• 40 hours of training with annual

refresher

• How to manage and control hazardous

releases

• Who is your emergency response

contractor?

LUST• Leaking Underground Storage Tank

• Michigan currently has approximately 9,000

known

leaking UST's

• How many DON'T we know about?

• ASTM 2600 Vapor Intrusion

NPLPage #6

• National Priorities List

• Superfund

PRP

• Potentially Responsible Party

• Superfund

• Joint

• Strict

• Several

• Go back to the beginning of

time

RAP Page #7

• Remedial Action Plan

• Identifies remediation procedure

• Time to remediate site

• Cost to remediate site

• Level of cleanup to be achieved through

remediation

RCRA

• Resource Conservation and Recovery Act

• RCRA permitted facilities can store

hazardous waste up to 90 days

RRP• Renovation, Repair & Painting Rule

• Affects contractors working in pre-1978

structures with child exposure (6 yrs or younger,

3 hours, 2 days a week)

• Residential rental property owners/managers

• General Contractors

• Electricians, plumbers, siding contractors,

painters, insulation contractors, window and door

installers and any other contractors working in

pre-1978 structures

SBS

• Sick Building Syndrome

• SBS is carpel

tunnel of new

millennium

• Vapor Intrusion

SEP

• Supplemental Environmental Project

• Able to reduce the cost of fines and

penalties by developing an SEP

• You can profit from an SEP

TRIPage #8

• Toxic Release Inventory• Roughly 700 TRI chemicals• Roughly 80,000 U.S. Companies are currently using TRI chemicals

•Do you think companies with TRI chemicals have an environmental exposure?

TSDF

Treatment Storage and Disposal Facility

Chris, time to tell your story on how you got started in the environmental business...

Construction and Demolition waste

Page #10

• CCA (Chromate Copper Arsenate) treated lumber

• Roughly 20 years to cycle through CCA

treated lumber

Phase I Site Assessment

Page #12• Identifies historical use• 2 mile radius search• Visual walkover of property• Remember to include:• AAI• Endangered Species

Assessment• Vapor Intrusion

Phase II Site Assessment

Page #13

• Gather samples to determine if there is contamination exceeding government standards

• If contamination levels are below government standards, file your BEA

• If contamination levels are above government standards...

Phase III Site Assessment

• RAP

• Identifies remediation plan

• Time to remediate site

• Cost to remediate site

• Level of cleanup to be achieved

through remediation

• Differences between E&S and standard P&C insurance products.

• 1. Majority of policies are written on a claims made basis.

Environmental Liability Insurance General

DiscussioneS Seminar Page15

3. Defense is usually within the limits.

Some contracts offer a separate

defense limit.

4. Deductibles

Make sure you can pay(deductible / SIR) within 30

days

6. Sudden and gradual versus sudden and accidental

7. Project Specific vs. Blanket Coverage vs.

Owner Controlled

12. Make sure to read and understand the policies

Page #16

• Read the “Definition” section

• Read the “Exclusion” section

• Go to page 1 of the policy

13. With contracts, make sure to clarify the insurance coverage’s being requested.

Submissions and Applications

eS Seminar Page 16

• 1. Warranty application, review with your client prior to binding• Application becomes part of the policy and the basis for its issuance

• 2. Complete submissions are very important• 3. Make sure to list each insured, type of work, property location... for there to be coverage

General IssuesPage #17

• 4. Authorization to bind letter.

CHANGE IS THE ONLY CONSTANT IN THE

ENVIRONMENTAL BUSINESS

There are no environmental experts

Successfully Writing Environmental

Insurance Begins With A Quality Submission

eS Seminar Page #18

EnvironmentalFines & Penalties

eS Seminar Page 22

• He billed General Mills $85,000 for the more

expensive Reldan• Testing revealed General Mills grain processing

facilities were

contaminated with Dursban• General Mills sustained a loss of $146.9 million• Roggy was sentenced to five years in prison, three

years of

supervised release and 200 hours of community

service

Who are you doing business with?

3. George Roggy was a licensed applicator hired by General Mills to apply Reldan on raw oats. Instead he purchased and applied Dursban, which is not approved but cheaper

Environmental Liability Insurance Coverage Overview

eS Seminar Page 27

Do not offer or purchase limited pollution policies

98% of US businesses are “small business”that can’t afford to self insure their environmental exposures

3 Main Benefits of Environmental Liability

Insurance• Defense costs• Claim management• Third party liability (property damage, bodily

injury, and business interruption)

Face value of an environmental insurance policy costs the insured fractions of a cent on the dollar, or the insured can wait until a loss occurs and pay 100 cents on the dollar out of their own pocket

Contractor Pollution Liability (CPL)Page #28

• Protects the insured while operating away from any premises they own, rent, lease or occupy, should they cause or exacerbate an environmental liability.

• Occurrence and claims made forms

• Job specific, annual, multi-year, or owner

controlled

• Can endorse with auto pollution liability

• Off site disposal coverage

• If more than 50% of work is environmental GL

and GL with products pollution

Cleanup Cost Cap Coverage (CCC)Page #29

• Caps the cost of an environmental remediation project

• Only a few insurance carriers are still offering this coverage

Closure and Post Closure Care Insurance

Page #30

• For regulated disposal, recycling, transfer facilities

• Frontier Insurance Company changed this market in the 90's and it has not recovered

Environmental Impairment Liability (EIL)

• Also referred to as Pollution Legal Liability (PLL)• Site Specific Coverage for new and/or pre-existing unknown environmental conditions

• First party on site cleanup• On site and off site third party bodily injury, property damage and business interruption

• First and/or third party auto pollution liability• Off site disposal coverage• GL with products pollution coverage• Under ground storage tanks

Professional Liability (E&O)Page #31

• E&O coverage for environmental engineers/consultants

• Can get CPL and GL

• Auto pollution

• Off site disposal coverage

Property Transfer CoveragePage #32

• Protects the buyer and/or seller should an environmental condition be found that was not caused by the new purchaser of the property

• Supports the value of the property

• Fills in gaps with environmental due

diligence

• Allows you to negotiate a more favourable

loan package

Secured Creditor CoveragePage #32

• Protects the loaning institution if they have to foreclose on a piece of collateral property

• Pays either the lesser of, or the total loan

amount

• Protects for the life of the loan

• Can do loan portfolio or one off deals

• Insurance company becomes the workout

department

• AIG got slammed

Risk Transfer / Risk Funding

Not in manual

• AIG used to call this Finite Risk• For larger insured’s looking to take control

of their destiny. Larger Brownfield projects• Blended product involving transferring risk

and self funding• Insured develops their own insurance

policy and it’s administered by a third party• Have CPA review

SuretyPage #33

Bonds for environmental projects

Transportation Pollution Liability (TPL)

Page #33• Not the MCS 90 endorsement• Broadened auto pollution liability form CA 9948• Covers during the loading / unloading and

transportation of the cargo• 800,000 tons per day of hazardous materials are

shipped in the United States• How do you purchase your raw materials FOB

point of shipment / delivery• Commingling of transported waste

Umbrella / Excess CoveragePage #34

• True follow form coverage

• Excess of pollution

Underground and Above Ground Storage Tanks (UST

or AST)Page #34

• Protects for releases from underground

tank systems

• Does not replace tanks or equipment

•Natural resource damages covered?

Since all premiums and coverage's are fully

negotiable you must work with multiple environmental

insurance carriers

If a business waits until an environmental problem occurs and any

governmental body gets involved, the cost to address the environmental problem will increase

on an average of 35% to 50%

Environmental Liability Exposures

eS Seminar Page #36

Agricultural IndustryeS Seminar Page #36

• Storage, use and disposal of fertilizers, pesticides, herbicides and animal waste

• Releases from above ground or underground

storage tanks

• Storm water runoff

• Spills from loading and unloading of farm

equipment

and supplies

• Air emissions

1. During an unusually heavy rainstorm, the wall of a farms on site lagoon used to treat pig wastes collapsed. More than 150,000 gallons of fecal waste flowed offsite, onto neighbouring properties and into a river. Waste cleanup costs exceeded $350,000, while third party damage claims exceeded $75,000.

eS Seminar Page 37

2. A property owner had his drinking water well tested prior to selling his land. Testing revealed that the well contained an alarmingly high concentration of total petroleum hydrocarbons. The source of the contamination were several dozen drums of waste oil and maintenance fluids buried on a neighbouring farm. Though the drums were buried by the previous farm owner, the current owner was nevertheless responsible for disposal of the drums, soil, groundwater cleanup, bodily injury, and property damage claims which exceeded $1,000,000 and caused the farmers bankruptcy.eS Seminar Page 37

Colleges, Universities and Other Educational

InstitutionseS Seminar Page 41• Air emissions from power plants


• Waste water treatment

• Fuel storage

• Utilities that cross school

properties

• Laboratory chemicals

2. In the chemistry lab of a small university,

experiments were being conducted under an

old hood. The hood filters failed and released

toxic fumes into the community. Several

residents had to be evacuated and others

rushed to the hospital. The college was sued

for several third party claims, along with a

$215,000 property damage claim for

contingent business loss.

eS Seminar Page 42

4. While constructing a new sports stadium at a university, a contractor ruptured two abandoned 10,000-gallon underground storage tanks full of gasoline and diesel fuels. Since a private company donated the land to the university and the contractor did not have pollution insurance, the university was charged $200,000 for the environmental cleanup.

eS Seminar Page 42

Commercial ContractorseS Seminar Page 43

• Impacting underground utilities• Excavating through and spreading

unknown

contaminants• Vapor intrusion• Releases from equipment and materials

stored at job sites... Vandalism• Transportation

1. An excavation/grading contractor unknowingly spread petroleum-contaminated soil across a project site during fill operations for a commercial office building. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor was eventually removed from the lawsuit. However, they incurred $90,000 in defense costs.

eS Seminar Page 43

4. An asphalt paving contractor paved a parking lot for a new commercial structure. At the end of the day, the tack coat was sprayed onto the sub-base prior to paving. During the evening, a major thunderstorm caused the tack coat to wash off and flow into a nearby stream. The contractor was responsible for cleanup costs, which exceeded $200,000.

eS Seminar Page 43

Residential Contractors

2. A residential contractor was subject to defense costs exceeding $25,000, in addition to property damage and bodily injury claims exceeding $400,000 from a residential community. During sewage installation, a subcontractor improperly tied in piping. This caused raw sewage to migrate into the underlying groundwater and contaminate residential wells.

eS Seminar Page 45

Golf Courses / ResortseS Seminar Page 51

• Over application of fertilizers, herbicides, pesticides


• Historical exposures

• Natural resource damages

• Overuse of irrigation

2. A residential community located adjacent to a golf course received its water supply from groundwater wells. Over time, the application of herbicides and pesticides to the golf course caused groundwater contamination. Bodily injury claims were filed by local residents for perceived injuries from drinking contaminated water. Property damage claims were filed because the groundwater system was no longer a suitable drinking source. Total claims exceeded $700,000.

eS Seminar Page 52

4. A golf course sent all of its waste golf cart batteries to an off-site facility for disposal. Over a period of several years, the facility did not adhere to applicable federal and state environmental regulations, and the golf course was found jointly liable for pollution conditions caused by the battery disposal facility. The settlement for cleanup exceeded $175,000.

eS Seminar Page 52

Hospitals / Medical FacilitieseS Seminar Page 53

• Spills or leaks from emergency power fuel

tanks• Medical / infectious waste (Incinerators)• Sewer and septic system contamination

(Hospitals dispose of roughly 250,000,000 lbs of

pharmaceuticals in sewers each year)

• Sick building syndrome• Radioactive and nuclear material• On site refrigeration systems

4. A dental office for years let old silver fillings go down the drain that went to an on site septic system. Testing of a nearby stream revealed high levels of contaminants. The source was determined to be the silver fillings in the septic system. Cost of remediation exceeded $250,000.

eS Seminar Page 54

ManufacturerseS Seminar Page 54

• Air emissions• TRI chemicals• Industrial and hazardous waste• Product cleaning and chemical treatment• Asbestos and lead• Loading, unloading, and transportation

exposures• Side Tracks, Trains move 1 ton of cargo 423

miles

on a gallon of gas

2. While moving a large metal coil, a forklift operator hit a hydrofluoric acid aboveground storage tank releasing dangerous fumes into the neighbouring community. Area residents and businesses were evacuated and several people were treated at the local hospital for fume inhalation. Claims for bodily injury and business interruption topped $94,000.

eS Seminar Page 55

MunicipalitieseS Seminar Page 58

• Waste water treatment plants / lift stations

• Historic site conditions (Brownfields)

• Service and mechanical garages

• Hazardous and electronic waste

collection

• Cemeteries

• Landfills, airports, schools, parks,

marinas....

1. Chlorine release at a wastewater treatment plant resulted in toxic air emissions. Area residents and businesses were evacuated and several people were hospitalized for inhalation of fumes. A total of 12 businesses were forced to shut down for the better part of a day. Bodily injury claims amounted to $70,000 and business interruption claims totalled $120,000.

eS Seminar Page 59

3. A local park owned by a municipality served as a convenient illegal disposal site for a recycling contractor. The contractor dumped 275 gallons of used mineral spirits into the municipal park, the hazardous contents leaked into the soil. In addition, the contractor emptied the contents of the vacuum truck into a nearby community lake. Total cleanup expenses amounted to $475,000.

eS Seminar Page 59

Real Estate Developers / Owners

eS Seminar Page 65

• Historical contamination• Pollution from neighbouring

properties• Natural resource damages• Impacting underground utilities• Off site disposal• Mold

1. A real estate developer placed a new building on the site of a former parking lot. During excavation petroleum hydrocarbon contamination was discovered. Cleanup costs exceeded $700,000

eS Seminar Page 65

2. A real estate investment trust (REIT) owned several parcels of vacant land in a remote area. When the owner and contractor visited the site to begin construction, they discovered that several piles of unidentified waste had been illegally dumped on the property. The owner had the piles tested, at a cost of several thousand dollars. The piles were determined to contain hazardous waste, and the owner's cost to dispose of it exceeded $250,000.

eS Seminar Page 65

7. While clearing a construction site for a new shopping mall, the building contractor followed routine procedure by hauling construction debris to a local landfill. Later, when neighbors close to the landfill complained about a strange odor, it was discovered that the debris contained hazardous materials. The municipality sued the developer for clean-up costs, which the court awarded in the amount of $1.2 million.

eS Seminar Page 66

Green Insurance General Discussion Fireman’s Fund states they were the first

to offer Green Insurance in 2006 Growing market since green insurance

is relatively new Green coverage’s are available for

personal and commercial insureds

Green Insurance General Discussion Green building involves the practice of

establishing healthier and more resource efficient models of construction.

Green upgrade coverage provides for replacing standard systems and materials with green ones.

Green Insurance General Discussion Green insurance offerings are changing

as insurance carriers better understand the risk and the market continues to mature with more carriers entering the green market.

Benefits to Green Insurance

Concentrates on increasing building efficiency (cost savings) while reducing impact on human health and the environment

Using energy efficient machinery and equipment (Energy Star)

Green coverage’s offer the ability to offset green upgrade costs while enhancing building construction.

Provide insureds with a means to be socially responsible.

Benefits to Green Insurance Improve occupant safety by creating a

better working environment. Insurance carriers offer premium discounts

on green certified buildings Insurance carriers can offer assistance in

helping insureds to reduce energy costs, water consumption along with other risk management green services such as goal setting, prioritize green investments, track savings…. Better protect human health and the environment.

Benefits to Green Insurance Utilities and government (local, state

and federal) offer incentives to build green or make green improvements.

Green buildings reduce risk of loss due to building systems operating at peak efficiency

Going green attracts and retains employees, students...

Page #78

Policy Features

Green coverage’s are generally extra coverage and limits above what is offered in a standard P&C policy.

Policy provides limit of insurance to rebuild damaged real and / or personal property according to existing green standards and to achieve / re-achieve green building certification, i.e. LEED

Policy Features

Coverage for a qualified engineer to meet LEED Green Building rating system.

Pay registration and certification fees to recertify real property.

Allow the insured to attain certification one level above the certified green building level prior to the loss or damage.

Policy Features Pay for test and analysis of HVAC

systems even if the systems were not damaged

Business income for longer period to rebuild green.

Can pay for more energy efficient machinery and equipment to meet green building standards

Covers costs to sort, segregate, cleanup and transport recyclable debris

Policy Features

Green coverage’s are generally extra coverage and limits above what is offered in a standard P&C policy.

Policy provides limit of insurance to rebuild damaged real and / or personal property according to existing green standards and to achieve / re-achieve green building certification, i.e. LEED

Policy Features

Coverage for a qualified engineer to meet LEED Green Building rating system.

Pay registration and certification fees to recertify real property.

Allow the insured to attain certification one level above the certified green building level prior to the loss or damage.

Policy Features Pay for test and analysis of HVAC

systems even if the systems were not damaged

Business income for longer period to rebuild green.

Can pay for more energy efficient machinery and equipment to meet green building standards

Covers costs to sort, segregate, cleanup and transport recyclable debris

Policy Features

Can get coverage to purchase replacement power and / or water from a public utilities while repairs are being made.

If you receive power form alternative energy you can get compensated for income lost while you are on the grid

Green Policy Features

Can get green features such as: Vegetated roof Underground alternative water system,

water efficient plumbing Non-toxic paints and carpets Insulation materials Energy Star rated electrical equipment

Green Policy Features

Solar, wind, geothermal Alternative energy equipment Translucent shades Paved surfaces such as sidewalks and

parking lots and you can replace with porous paving (to replenish ground water and / or for irrigation)….

Page 79

General Green Information

Some Green standards / certifications are LEED (Leadership in energy and environment design), Energy Star, Green Globes

There are in excess of 12,000 and growing Energy Star Buildings


Buildings eligible to earn the Energy Star label include

Offices Retail stores Courthouses Hospitals and medical offices Schools, dormatories… Supermarkets Houses of worship Warehouses….


LEED certified buildings cost more to build (estimates are 2% to 6%) but the reputational value of a Green building allows higher rent to offset the increased building costs.


In achieving Green certification you can qualify for government tax incentives, utility credits, reduced loan rates, reduced insurance premiums….


Savings achieved through green building / equipment can free up monies needed in other areas of a business.

Page 80


According to data from the EPA public schools spend roughly $6 billion a year on energy, which is the second highest expense following salaries. Colleges and universities spend approximately $2 billion on utility bills.


The US Green building Council (USGBC) has found that green buildings typically use 30 to 50 percent less energy, 30 percent less water and emit 35% less Carbon dioxide (CO2)

USGBC data shows that schools that have made green renovations save nearly $100,000 per year.


The Princeton Review found that 68% of high school students are looking for a green campus in search of the best fit college for them.

Risk Management Strategies

Companies going green should evaluate their insurance policies to ensure that coverage is provided when sustainable building materials are used in the course of the repair, replacement or rebuilding of damaged property.

Risk Management Strategies

Some municipalities have made green building a requirement for development and construction.

Check with local building ordinances because changes are being made, i.e. when you replace you have to include sustainable design.

Cons To Green

Lack of industry wide standards which can create confusion and potential liabilities for consumers of green products.

Cons To Green

Lack on knowledge on the health, safety, functionality, longevity, integrity of green products.

Page 81

Cons To Green

Green or sustainability has been abused and manipulated as a marketing tool

Lack of standards will allow this to continue. Fraud

Cons To Green

Zoning conflicts with inappropriate green products

Cons To Green

Green insurance is not regulated so it varies from insurance carrier to insurance carrier

Creates an E&O exposure.

Green Auto Insurance

For hybrid and alternative fuel vehicles you can get full replacement cost versus just actual cash value

Green Auto Insurance

There is no depreciation and the vehicle will be replaced with the most current make and model. (loss takes place within the first three model years)

You can even choose to upgrade to a hybrid after a covered loss has occurred.

Green Boat Insurance

For Boats can get green hull coverage designed for vessel owners to meet Federal air standards for tugs, ferries, commercial fishing vessels and off shore service vessels.

This is in regards to older engines that require replacement or substantial rebuilding.

Green Boat Insurance

The green hull and machinery coverage will repair or replace the damaged engine with the most efficient model available.

In case of a total loss to one engine the coverage will also cover a portion of upgrades to the undamaged engine to match efficiency performance.

Green ISO Endorsements

ISO (CP 04 02) is a commercial property green upgrade endorsement called Increased Cost of Loss and Related Expenses for Green Upgrades.

Approved March 2010, the endorsement changes Replacement Cost Coverage valuation on building and personal property offering additional costs to repair or replace damaged covered property with Green Standard products.

Page 81


ISO (CP 04 02) increases the amount of coverage you have to build or replace property with Green materials.

It can’t be used on personal effects, property of others, leased property or stock.


For Green upgrades that are required by ordinance or law you would need to combine ISO (CP 04 02) with ISO endorsement Ordinance or Law Coverage Endorsement (CP 04 05) to cover required expenses that are in addition to Green upgrades.

The Green upgrades and Ordinance or Law endorsements are written so they work together


ISO also offer a business owners (BOP) endorsement BP 14 75, Increased Cost of Loss and Related Expenses for Green Upgrades

environmentalManagement

Strategy (eMS)Page #83

To identify your environmental footprint you need to develop and

execute your

*The better defined your starting point, the more control you have in being able to minimize risk, maximize value and optimize performance to drive your growth and profits.

An eMS identifies your environmental footprint and

your starting point.

An eMS is an evolving strategy

based upon doing better today

than yesterday and doing better tomorrow than today.

An eMS utilizes a TEAM SPORT

strategy to assure you gather the necessary competitive environmental intelligence

to execute your eMS.

Together Everyone Accomplishes MoreBECAUSE

Strategic Partners Optimize Resources

Time

T.E.A.M. S.P.O.R.T.

• Attorney• Insurance Agent• Financial Institution• Accountant• Environmental Service Provider• Realtor• Employees

Who are your TEAM members?

• What is coming in your front door?• Why do your customers do business with you?• What about…• Raw Materials/Supplies• Business Vendors• Tenants• Students/General Public• Who are you doing business with?

Developing And Executing Your eMS

Step OnePage #84

A manufacturer hired a transportation company to haul liquid solvents. The manufacturer purchased the solvents FOB point of shipment because it was cheaper. When the shipment veered off the road and tumbled into the river below it became a liability for the manufacturer when the tank ruptured. 80,000 people in the neighbouring towns were evacuated as a cloud of toxic vapor settled over the area. As a result of the accident, solvents travelled downstream polluting a lake and destroying thousands of fish and vegetation. Claims costs were $3 million. Poor vehicle maintenance was determined to be the cause of the accident.

Example #1: Page #84

This is the first question a business needs to answer while developing their eMS.


(Client’s and vendors can create environmental liabilities)

• What's going on inside your corporate walls?

• Are you subject to any environmental laws or regulations?

• What vendor services are being performed inside your corporate walls?

• How do you store, handle and treat raw materials, supplies, waste?

Developing And Executing Your eMSStep Two

Page # 85

A manufacturer stored bag house dust

containing heavy metals in an uncovered

dumpster behind their facility. Whenever it

rained, storm water mixed with the dusts,

forming a slurry, which ran off-site. Soil

testing of a nearby stream bank showed high

levels of lead, cadmium and mercury. The

contaminant source was determined to be the

dumpster run-off. The manufacturer was

responsible for cleanup costs exceeding

$250,000.

Example #2:

A millwright dropped a piece of heavy

equipment from a crane onto a pipe leading

to a hydrofluoric acid tank at a manufacturing

plant. Acid was emitted into the surrounding

atmosphere, creating a vast vapor cloud.

Approximately 3,000 residents were

evacuated and 1,000 were treated for

respiratory injuries. Over 4,500 claims were

filed in excess of $23,000,000. The claims

included bodily injury, property damage,

business interruption and emergency

response costs.

Example #3:

A maintenance department used solvents for parts washing. They performed the washing over a drain leading to an on-site septic system. Over time, the septic systems leach field migrated into the surrounding soils and groundwater. At the time of the septic system closure and conversion to a public sewer system, the contamination was discovered. Site remediation exceeded $720,000.

Example #4:

What's going out your back door?

• Finished Products, Equipment

• Customer Services

• Recyclables

• Waste Materials

• Vendor Services


Step ThreePage #85

A service station had a waste hauler that was

transporting its used motor oil overturn and

spill its load into a nearby stream. Under

CERCLA, the service station must contribute

for their apportionment of the load for

cleanup cost since federal law states that you

own your waste from cradle to grave. Cost to

settle the claim for the service station was

$600,000.

Example #2: Page #86

Who are your neighbors?

You can be executing your eMS but you can still experience an indirect environmental impact from one of your neighbours. Who are your neighbours and what potential environmental liabilities can they create?

ASTM 2600 (Vapor Intrusion)

Developing And Executing Your eMSStep Four

Page #86

Example #2:

Authorities evacuated a small farming town after a noxious cloud drifted in from a cotton gin with a leaking fertilizer tank. The cloud came from a 30,000-gallon tank of anhydrous ammonia, which is used as a fertilizer. Police said the open valve on the tank made them suspicious somebody might have tried to steal some of the fertilizer and left the valve open. Anhydrous Ammonia can also be used to make the drug methamphetamine.


Step Five

eMS Step Five: Your TEAM leader will compile the information gathered from the eee questionnaire into a categorized format that assures all TEAM members will be on the same page?

Page #87


Step Six

eMS Step Six: TEAM members will add their professional competitive intelligence to the eee compilation so you can prioritize and budget for the strategy laid out by your eMS TEAM and seamlessly blend it into your business operations.


Step Seven

eMS Step Seven: The eMS is a customized evolving, continual improvement strategy that has moved you past government compliance, you are environmentally transparent and in control of your destiny.

Your Business Environmental Transparency/Sustainability

(SOX, SAB 92 Ruling, FIN 47, ISO 14000, Brownfields, UST’s, Terrorism)▼

eS coach you & deliver Competitive environmental Intelligence (CeI)

▼

eMS development▼

TEAM leader performs environmental efficiency evaluation (eee)

Step 1: What is coming in a business front door?Step 2: What’s going on inside your corporate walls?

Step 3: What is going out your back door? Step 4: Who are your neighbors?

▼

TEAM leader compiles eee and distribute to TEAM members

▼

eMS TEAM members add their CeI to the eee▼

You execute your eMS (eMS Drives Growth and Profits)

environmental Management Strategy (eMS) Flow chart

In 2008, The Economist Intelligence Unit surveyed executives around the world about their attitudes to environmental risk management. Approximately 50% of the respondents represent business with annual revenue of more than $500 million US. All respondents have influence over, or responsibility for strategic decisions on risk management for their companies.

Key points of environmental risk management survey:

• Environmental risk management is frequently managed in an

ad hoc fashion.• There is no clear consensus about who should be responsible

for environmental risk.• Many companies conduct strategic activities without a formal

assessment of environmental risk.• Respondents see compliance with environmental legislation

as a key strength.• Managing environmental risks associated with suppliers and

partners is a key area of weakness.• Better reputation with customers and investors is seen as the

main benefit of environmental risk management.• Lack of certainty about the impact of environmental

liabilities and the future scope of legislation are the main obstacles to effective environmental risk management. ©The Economist Intelligence Unit 2008

environmental efficiency evaluation (eee) Questionnaire

eS Seminar page #89

• An eee identifies the various direct and indirect environmental issues impacting your business

• An eee does not attempt to meet any specific governmental standards or follow specific due diligence models that have been developed such as All Appropriate Inquiry (AAI), ASTM Phase I & II reports, ISO 14000, Enterprise Risk Management….

6) Web Site Address

19) Does the company have any subsidiaries?

22) Is your company dependent upon any one customer, vendor or supplier?

24) What percentage of your gross receipts are attributable to subcontractors? (List subcontracted services)

25) What is your process to confirm subs/vendors have agreed upon insurance in place and frequency?

31) What programs do you have on file with the Fire Department, Law Enforcement, Hospitals?

33) Do you have an in house emergency response team?

34) Do you have an emergency response vendor?

38) Does your company plan to buy, sell or discontinue any operations?

39) Does your company select, own or manage disposal sites?

41) When is the last time you had your waste stream characterized?

43) Are you aware of any past or present pollution conditions, or any circumstances which may reasonably be expected to give rise to a liability claim? (Buddy’s Bagels)

Products

49) Does your company manufacture, buy, sell a product(s)?

53)Do you offer any warranties or guarantees?

54)Does your company install, service or demonstrate products?

55)Does your company import or export products?

(Have law suits become China's #1 exported product?)

56)Do you enter into contracts where you assume the liability of others? (Monroe County Septage Hauler Agreement)

Property

58) Does your company own, lease or occupy real property?

60) Any properties with deed restrictions?

62) Describe your neighbours within a one mile radius of your property. Google Earth

66) Are all properties serviced by municipal water and sewer?

69) Are there other occupants of your real property that are not associated with your company?

70) Any onsite waste treatment facilities?

Property74) What type of raw materials, products, waste does

your company store on site?

77) Is your company responsible for loading or unloading materials, products or waste?

78) Are there any plans for future development of your real properties?

79) Any Brownfield property(s)? In Michigan, Environmental Insurance qualifies as a reimbursable expense under TIF. Public Acts 201, 202, 203 and 204. What does your state allow?

80) Do you perform annual inspections of non-owned disposal facilities?

Transportation82) Does your company own or operate motor

vehicles?

Risk Transfer/Insurance

101) Describe your risk transfer strategy and changes or additions you feel need to be addressed

102) What size financial loss can the company handle?

What size financial loss could put you out of

business?

To assist TEAM members understand your current regulatory compliance position, please answer the following:

• Air• Liquid Effluents• Above Ground and Underground

Storage Tanks• Solid Waste Management• Hazardous Waste Management

Conclusion

• Environmental Issues Impact Every Business• Sustainability begins with Risk Management• Coaching client's on environmental efficiency will

leverage their growth and profits along with yours• You are now a trusted advisor and strategic

partner•If you are not discussing environmental insurance

with your client’s, when they do experience an

environmental loss, your E&O insurance may be the

only coverage they have.

For more information:Chris Bunbury @ [email protected]

Phone: 231-256-2122Mobile231-218-1041

www.EnvironmentalRiskManagers.com

Thank you for your time.

mailto:[email protected]

Chris Bunbury, eS environmental Strategist, Inc. Email: [email protected] Phone: (231) 256-2122 Fax:...

Documents

Transcript of Chris Bunbury, eS environmental Strategist, Inc. Email: [email protected] Phone: (231) 256-2122 Fax:...