Environmental Liability 2018 Risk Trends

Emerging Contaminants Perceived as a potential or real threat to human health and/or the environment; frequently lacking published health standards Lead in Drinking Water Toxic Fluorochemicals (PFAS, PFOA, PFOS) Nanomaterials (NMs) Pharmaceuticals/Personal Care Products – WWTS Algal Blooms/Nutrient Pollution Indoor Air Quality – Mold, Legionella, Virus …in many cases, driven by the increasing ability to measure infinitesimal constituent concentrations and correlate with disease or property damage (including natural resource damages)

Environmental Risk Evaluation Considerations Operational Exposures Contractor Exposures Professional Exposures Real Estate Portfolios/Multi Unit Indoor Air Concerns Development Exposures/Brownfield Blending with CGL for value

Environmental Liability – Key Terms Deserving Emphasis Pre (Existing) or New Pollution Condition (Retroactive Date) Known Condition Exclusion Insuring Agreement Triggers Discovery, Legally Obligated, Third Party Claims, Government Mandate Named Insured, Additional Insured, Mortgagee Insured capacity

PLL Insurance Benefits…Transactions Environmental insurance should always be a pre-disposition/acquisition consideration For Sellers: Sever Balance Sheet liabilities Take environmental conditions price negotiation “off the table”, preserve sale price Help to sever balance sheet liabilities Stands as Seller’s indemnification in a deal (add Buyer as Named Insured) For Buyers: Protection against destabilizing event from unknown environmental conditions – cleanup or third party claims Satisfy lender, shareholder and directors requirements Provide material indemnification for Sarbanes-Oxley compliance

Premises Pollution (PLL) Supporting Real Estate Transactions Insurance for unexpected loss Known Release: The HOUSE is on Fire. Cleanup Excess of Indemnity, Cost Cap (aka the “unicorn”), third party coverage (BI/PD) usually available Suspected: Cleanup limitations such as no voluntary investigation, no discovery (third party trigger), government mandate trigger, capital improvement exclusion, soil management exclusion, institutional/engineering controls exclusion Unknowns: Complete First and Third Party Coverage

Recent Environmental Insurance Placement and Claims Examples What’s Hot (Placement Examples) Trending Claims Examples Questions? Don Bryant, CHMM Vice President, Environmental Risk Practice Leader Mary Gerding, ARM Vice President, Environmental Client Service Executive