Legal Disclaimer This presentation is for informational purposes only and has an edition date of March 2013. This presentation is necessarily general in content and intended to provide an overview of certain aspects of environmental liability products. Claims examples are based on actual cases, composites of actual cases, or hypothetical situations. Actual coverage is subject to the language of the policies as issued. The material presented is not, nor does it purport to be, a complete or exhaustive analysis of legal liability exposures or risks and should not be relied on as legal advice or a definitive statement of the law in any jurisdiction. For such advice, an applicant, insured, listener or reader should consult their own legal counsel. No liability is assumed by reason of the information this presentation contains. The views, information and content expressed herein are those of the author(s) and do not necessarily represent the views of Chubb Insurance Company of Canada or of any of The Chubb Group of Insurance Companies (“Chubb”). Coverage may not be available in all jurisdictions. This presentation is the property of Chubb. Any use of this presentation without Chubb’s prior written consent is prohibited.
Why Environmental? Gap in Coverage Third Party Coverage Gap Environmental coverage addresses third party BI/PD, gradual leaks included GL excludes damage from “pollutants” Sudden & Accidental coverage provides give back for Third Party BI/PD but in very specific circumstances Difficult to meet the S&A criteria
Why Environmental? Gap in Coverage First Party Coverage Gap Environmental coverage provides Remediation Costs coverage No first party coverage provided for pollution on the GL Policy Some property policies provide small “freebie limit” ($10-25K ) but there are numerous restrictions and the limit is often too small to have an impact
Environmental Remediation Canada vs. United States US has EPA to strictly govern and regulate national remediation standards on a consistent basis Canadian environmental law & remediation are decided on and implemented at the provincial and sometimes municipal level What does this mean? Different standards across all provinces and territories *This is why the First Party Discovery Trigger is important in Canada*
Chubb Environmental Product Snapshot Environmental Site Liability (ESL) Contractor’s Pollution Liability (CPL) Minimum Premium $10,000 Minimum Deductible $25,000 Commission 12.5% Multi Year Term Capabilities Large Capacity
Contractors Pollution Liability Covers insured’s covered operations for: TP claims for BI/PD from a pollution incident Environmental Damage from a pollution incident Annual & Project-Specific Capabilities Represents 15% of our portfolio – growth area! Occurrence and Claims Made Coverage provided for defined covered operations
Contractors Pollution Liability Target Clients: Environmental/Remediation Specialty (Trade) Developer/ Re-developer O&M Contractor Only area we are not able to cover is asbestos exposure Risks We Avoid: Pipeline Contractors Asbestos Contractors Hydraulic Fracturing Contractors
Contractors Pollution Liability Exposure Examples: Improper equipment install Site preparation and excavation Demolition On-site chemical or fuel spill Improper HVAC installation Exploration Drilling
Environmental Site Liability Covers a specific site for: TP claims for BI/PD from a pollution incident Remediation Costs from a pollution incident Pre-existing vs. New Conditions – easy as ABC+D! Coverage A – Pre-existing Pollution Incident Coverage B – New Pollution Incident Coverage C – Non-Owned Location Coverage D – Business Interruption
Environmental Site Liability Exposures Real Estate: High exposure tenants (dry cleaner, gas station) Mould Tank Spills/Leaks, PCB contamination House cleaning and maintenance chemicals Manufacturing: Fire/Explosion – water runoff Tanks – hydraulic fluids, paints, fuels Historical Disposal Practices Air Emissions (NPRI Database)
Environmental Site Liability Exposures Health Care/ Long Term Care Operations: Storage of chemicals, pathogens, mutagens, teratogens, and bioactive materials Storage of acids, bases, flammables Air emissions (ammonia release from on-site cooling) Disposal/use/storage of drugs or waste Cross contamination of clean rooms or labs Medical waste on site Legionella
Required Underwriting Information ESL/CPL Completed Chubb Application Financial History Operating History Environmental Site Assessments Phase I & II Assessments required to provide coverage for pre-existing conditions These are reports of the environmental condition of a property (typically prepared as part of a sale/financing agreement)
Chubb Environmental “Lite” Product Snapshot Envirolite: Min. premium $2,500 Min. deductible $5,000 Commission 15% Multi-Year Term Same Day Quoting CPL Lite: Min. premium$3,500 Min. deductible $10,000 Project-Specific only <$5M in Project Revenue Project length < 1 Year
Envirolite (mini ESL) Same as ESL, covers a specific site for: TP claims for BI/PD from a pollution incident Remediation Costs from a pollution incident Same wording as our ESL Form – meant as an introductory product for specific operational classes Only differences between ESL and Envirolite: 1.Sub-limited On-Site Remediation ($100K - $1M) 2.New conditions coverage only = Lower Deductible Options = Lower Minimum Premium
Required Underwriting Information Envirolite: Chubb or Competitor Application Number of Sites/Addresses* Any above or underground tanks* Summary of operations/site occupancies* CPL Lite: Chubb or Competitor Application Project Revenue* Project Description* Project Length* Limits Required* *We can provide a non-binding indication with these items
Environmental Site Liability Mistake leads to Biohazard Waste Removal Lab late night cleaning crew at a blood lab mistakenly placed used needles in the dumpster meant for unregulated trash. Biohazardous waste service needed to be called to clean the dumpster and remove the waste. Lab paid biohazardous waste disposal service $150,000 to clean out the dumpster – would have been significantly more if the dumpster had gone to a landfill already.
Environmental Site Liability Mould Remediation at Class A Office Building Mould was found in a Class A Canadian Office building requiring significant remediation. Claim remains open but Chubb has paid out over $1.3M to remediate the site.
Environmental Site Liability Property Manager Discovers Contamination Canadian property manager discovered a large amount of contamination as a result of a historical dry cleaning operation on site. Chubb offers insurance solutions to safeguard a property manager or owner against new pollution conditions as well as unknown existing contamination. Remediation costs in this case were greater than $1.2M
Environmental Site Liability Spill Cleanup Shuts Down Building Tank failure caused release of 1,000 gallons of heating oil into basement of a managed building. Contamination was widespread and damaged tenants’ furniture in inventory. Cleanup/repair took 1 week. Management firm was liable for $200,000 in property damage as well as $125,000 for remediation. Firm incurred $100,000 for business interruption and extra expense due to loss of rent.
Contractors Pollution Liability Freon Leak in Refrigeration System Canadian insured serviced a refrigeration system at a mall’s skating rink. A month later, freon escaped the system and killed a janitor. The loss occurred in Alabama and the claim was valued at $4-5M. Chubb’s Contractors Pollution Liability insurance has a current reserve on this claim of $1.25M
Contractors Pollution Liability Drilling Contamination at a Canadian Mine Site Canadian company performed drilling operations using brine in the drilling process. The salt content contaminated the area and the government was brought in to investigate. Remediation costs are estimated to be above $300,000 and the company will also likely face government fines up to $300,000.
Environmental Losses In The News
Chubb Advantages Experienced Underwriting Chubb Environmental Solutions provides an experienced team of environmental and business professionals who develop insurance programs that meet individual company needs.
Chubb Advantages Loss Control Services Our loss control recommendations can help: Reduce the probability of loss Improve the odds that, if a loss does occur, its severity is minimized In phone or site visits, risk engineers look for: Above/below ground storage tanks Secondary containment Hazardous waste/disposal practices Neighbouring exposures Management systems
Chubb Advantages Responsive Claim Service Chubb has an unparalleled reputation for treating customers fairly and providing responsive claim service
Chubb Advantages Enduring Financial Strength Chubb’s strong balance sheet and superior credit rating from A.M. Best are assurances of our financial strength