RISK & INSURANCE®
POWER BROKER®: ENVIRONMENTAL
Aashish “A.C.” Chauhan
Adam J. Hill
Director Aon, Chicago Broker “Cleans-Up” a Sale There is nothing like a slew of newly uncovered environmental liabilities to put a damper on the sale of an 85-year old family-owned specialty chemicals distribution company. And those liabilities provided veteran Aashish Chauhan, a director with Aon Risk Solutions in Chicago, the chance to prove his mettle so
the Robins family could finally retire from the business.
While G.S. Robins had an environmental policy in place that would have covered all the newly
documented liabilities, it was set to expire in 2013 at which time exclusions would most likely
have been put in place. Meanwhile, the buyer was asking for a 10-year indemnification period.
Chauhan opened up the extensive data room to policy carrier Chartis, and waited for their
terms to provide coverage for the transaction. The transaction, worth about $50 million, utilized
run-off directors’ and officers’, reps and warranties, and environmental coverage.
“Without the availability of the right insurance the deal to sell my company would not have
happened,” said G.S. Robins principal Steve Robins.
For the Marine Spill Response Corp., the 2010 Gulf of Mexico oil spill created numerous
headaches as renewal period came around for 2011 coverage.
“A.C. did a superb job in working with our carriers, keeping them informed and helping them
understand that their perceptions of risk exposure were overstated, and creatively coming up
with alternative methods of calculating the 2011 premium that saved us significant premium
dollars,” said Mike Sample, vice president and general counsel for Marine Spill Response Corp.
Charity O’Sullivan, ARM
Vice President Marsh, New York Brokering a Tricky Deal An Australian mineral resources company that was new to the industry, WPG Resources, in early 2011 turned to Adam Hill— vice president, N. Y. metro hub leader environmental at Marsh Inc.—for advice on a long-term iron ore exploration project and its associated infrastructure development for exporting product.
The land was previously leased by a global energy and petrochemicals company, resulting
in known on-site pollution conditions. At the time of the transaction, the land was owned by
the state government of South Australia.
Under the proposed purchase agreement and development clauses, there were
requirements to remediate the known pollution conditions and requirements governing the
responsibility for any off-site migration of these conditions.
As the client was unfamiliar with environmental risk transfer, Hill worked closely with
company risk managers to educate them on the potential environmental exposures and
available environmental insurance products.
After six months of coaching, the client, through negotiations with the South Australia
state government, developed a cost-effective structure that satisfied the client’s needs and
the complex environmental clauses in the purchase agreement.
“Adam was very clear with explanations about our insurance requirements and was
always available to talk, either on the phone or in person, as we wanted in a prompt
manner,” said Larissa Brown, company secretary for WPG Resources.
Senior Vice President Marsh, Los Angeles Fickle Carriers Test Mettle Sometimes a new insurance carrier coming in with favorable pricing and terms for a difficult renewal can be a case of being careful what you wish for. Marsh broker and Senior Vice President Charity O’Sullivan found herself in just such a situation last fall for her client, a multinational
manufacturing company, when that new carrier’s management about-face resulted in much
more restrictive coverage. The client’s claims under the expiring program, along with its lack of
environmental reports, complicated her task of coming up with a replacement.
O’Sullivan quickly found a back-up market, which resulted in a 35 percent premium
reduction and an overall improvement in terms and conditions. The client’s risk manager noted
that one of the coverage extensions she negotiated included a favorable claims reporting
provision, “which provided us with more autonomy in handling any future remediation issues.”
Overall, the risk manager said that O’Sullivan’s keen grasp of the varying environmental
requirements of the dozens of countries where it has facilities has made her a valuable member
of its risk management team. As both a buyer and seller of properties with potentially grave
environmental liabilities, O’Sullivan always manages to come up with solutions that give the
company peace of mind. “She is a person of great integrity and insight,” the risk manager said.
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Managing Director Aon, Jericho, N. Y. Landfill Gas to Fuel Vehicles When you can play any role in furthering a technology that can help reduce this country’s dependence on foreign oil, it just makes going to the office every day all the more enjoyable. Howard Tollin’s work with the Cornerstone Environmental Group will aid in its quest to take landfill gas and convert it into fuel for
vehicles. A large contract for BioCNG was recently executed and Tollin looks forward to many
more as alternative energy sources become a reality and not just a politician’s slogan.
Tollin’s efforts for a New York metropolitan area law firm helped facilitate a very difficult
litigation settlement. “The carriers were reluctant to accept the risks, and Howard guided us
to two carriers for the two sites at issue and was eventually successful in getting quotes for
policies that would cover all of our risks,” said a partner in the firm.
Tollin also helped the firm’s client who wanted to insure third-party claims and risks of
unknown contamination for a difficult cleanup located near a Superfund site. “By approaching
new markets, Howard was able to offer our clients options to cover risks in difficult-to-insure
situations,” she said.
As a director for New Partners for Community Revitalization, Tollin’s expertise in
environmental insurance helps in furthering the group’s goal to turn brownfields throughout
the state into thriving tax-generating properties. New Partners Executive Director Jody
Kass said Tollin’s environmental insurance knowledge has been instrumental in the group’s
When the Pollution Needs a Solution A major manufacturing company’s nascent acquisition of a European business with chromium contamination issues might not have gone through had it not turned to Max West for what the broker likes to term “the solution to the pollution.” With a relatively short two-month timeline, West delivered a
solution with premium costs that were below expectations, said the company’s CFO.
Senior Vice President