Environmental Liability Transfers: An Alternative Approach to Transferring Risk in a Post-Environmental Cost-Cap/Stop-Loss Insurance World

ABSTRACT

During the 1990's and early 2000's, guaranteed fixed price remediation (GFPR)/Cost Cap insurance contracts offered by national environmental engineering firms and supplemented with environmental cost cap insurance policies offered by the major insurance providers was in its heyday. Engineering and insurance firms formed alliances that secured hundreds of millions of dollars in GFPR/Cost Cap contracts that enabled owners of legacy industrial properties and developers to define and secure the fixed dollar amounts for remediation of known environmental conditions at their properties enabling more accurate estimations of return on investment and facilitating real estate transactions. However, the impact of the “Great Recession”, dollar losses due to unforeseen site conditions, convoluted project management and regulatory factors caused firms providing these services to exit the marketplace. The demand for environmental risk transfers has not diminished and continue afford many benefits to the environment and to a growing local and national economy.

About the author

Thomas Lobasso, is an Executive Vice President with Environmental Liability Inc. (ELT). With over 38-years of experience in the environmental consulting and risk transfer field, Mr. Lobasso has directed environmental investigations at Federal Superfund sites, petrochemical and government facilities throughout the United States. Throughout his career he has developed and utilized innovative contracting to transfer environmental liability at legacy industrial and former hazardous waste sites and played a key role completing in two award-winning Brownfield redevelopment projects in New England.