American International Group

February 6, 2013

Environmental Oversight

Source: Property Casualty 360, January 2013
By: Dave Lenckus

While Pollution Coverage Is Gaining Traction Among Discretionary Buyers, Many Businesses Remain Underinsured and at Risk

AIDED BY LOW PRICES—AND LARGE UNCOVERED LOSSES CAUSED BY RECENT EVENTS—ENVIRONMENTAL CARRIERS AND PRODUCERS SEE OPPORTUNITY TO EXPAND PURCHASES BY NEW BUSINESS CLASSES, INCLUDING HEALTH CARE, HIGHER ED & HOSPITALITY

When it comes to potential growth areas for the insurance industry, Cyber liability, a relatively new coverage area, has been getting much of the recent attention.

But Environmental insurance—which is now many decades old—may also represent a very real chance for carriers and producers to significantly increase their premium volumes—if they can succeed in convincing a broad swath of commercial buyers that coverage is necessary, even for organizations that don’t consider themselves polluters.

For some select classes of business, the financial backstop of pollution insurance has long been a mandatory buy. under the 1976 Resource Conservation and Recovery act, owners of landfills; underground storage tanks; and hazardous waste treatment, storage and disposal facilities must provide financial responsibility assurances to cover remediation and third-party damages stemming from a pollution incident.

Many lenders on real estate deals—whether for acquisitions or new developments—also demand that borrowers secure insurance to protect against unforeseen site contamination. And construction-project owners will frequently insist their contractors acquire the coverage.…

December 18, 2012

Insurers May Face $11 Billion More in Asbestos Claims -A.M. Best

Source: Dow Jones News Service, December 17, 2012
Posted on: http://envfpn.advisen.com

U.S. insurers may face $11 billion more in asbestos-related costs than they were anticipating, according to a new study that warns claims on decades-old insurance policies show no signs of abating.

The insurance industry has already paid out about $51 billion in claims tied to asbestos over the past quarter century, and has $23 billion set aside for future expenses. But the report from ratings firm A.M. Best concludes the ultimate cost of such claims will eventually hit an estimated $85 billion. That’s up from $75 billion in its previous estimate, published last year.

The increasing cost of each claim, the recent successes of plaintiffs’ attorneys, and the long latency periods for some of the more serious illnesses caused by the once widely used mineral mean “sizable losses are likely to continue for years,” A.M. Best said in the report, due to be released this week.

Insurers with significant exposure to asbestos claims include Hartford Financial Services Group Inc. (HIG), Travelers Cos. (TRV) and Warren Buffett’s Berkshire Hathaway Inc. (BRKA, BRKB), which has taken on billions in asbestos liabilities in recent years through reinsurance deals with American International Group Inc. (AIG), CNA Financial Corp. (CNA) and Lloyd’s of London.

While it hasn’t been widely used since the late 1970s, asbestos was once common in a variety of building materials and other products, and valued as a fireproofing and insulation material until it became clear that it presented a significant health hazard.…

July 12, 2012

Chartis Expands NextGen Protection with Addition of PLL Power Pack ProtectSM

Source: Business Wire, July 11, 2012
Posted on: http://envfpn.advisen.com

The Chartis insurers today announced the addition of PLL Power Pack ProtectSM to enhance their NextGen Protection suite of industry specific insurance products. PLL Power Pack Protect is designed to address environmental exposures associated with ancillary assets such as transmissions systems in the power generation industry.

Power generation is a continually growing and changing industry faced with an increasing amount of environmental risk exposure from ever more complicated and prevalent power transmission systems. Environmental pollution conditions at power transmission locations can cause financial hardship for the power generator, possibly affecting their ability to provide services to their customers or impacting their operating budget.

PLL Power Pack Protect is combined with Crisis Response and Crisis Management to provide an insurance solution tailored to the environmental pollution risks associated with power generation and transmission systems.

We believe this newest addition to the suite of innovative NextGen Protection products strengthens our customers’ efforts to take a proactive approach to managing the environmental exposures associated with this constantly evolving and growing industry, said Lana Keppel, Chartis Environmental Division Executive.

Drawing on its nearly three decades of experience in the environmental insurance marketplace, Chartis continues to identify industry classes that face potential exposure to environmental liability from facilities they own or operate and products and services they provide.

For more information regarding NextGen Protection from Chartis, please dial 1-800-348-4314 or e-mail environmental@chartisinsurance.com.

About Chartis

Chartis is a world leading property-casualty and general insurance organization serving more than 70 million clients around the world. With one of the industry’s most extensive ranges of products and services, deep claims expertise and excellent financial strength, Chartis enables its commercial and personal insurance clients alike to manage virtually any risk with confidence.

Chartis is the marketing name for the worldwide property-casualty and general insurance operations of Chartis Inc. For additional information, please visit our website at http://www.chartisinsurance.com. All products are written by insurance company subsidiaries or affiliates of Chartis Inc. Coverage may not be available in all jurisdictions and is subject to actual policy language. Non-insurance products and services may be provided by independent third parties. Certain coverage may be provided by a surplus lines insurer. Surplus lines insurers do not generally participate in state guaranty funds and insureds are therefore not protected by such funds.…

April 27, 2011

Los Angeles School District Sues Insurer Over Waste Terms

Source: http://enr.construction.com, April 17, 2006
By: Tony Illia

The Los Angeles Unified School District is locked in a high-stakes legal battle with its insurer, American International Group, over a $100-million policy it bought to cover rising cleanup costs at school construction sites found to be contaminated with toxic substances. The lawsuit, filed in L.A. County Superior Court on Feb. 28, accuses AIG, New York City, of reneging on a 1999 pact to cover for 20 years much of its environmental cleanup cost—an expense district officials admit could reach policy limits.

District officials bought the $7.5-million policy in the wake of problems surrounding Belmont Learning Complex, an $87-million high school to be built on a site later found to contain methane and chemicals. The incomplete structure was abandoned in January 2000. State lawmakers then adopted a law to require review of new potential properties by the state Dept. of Toxic Substances. The Belmont fiasco led to a host of lawsuits and investigations that will ultimately cost the district millions of dollars to remedy.…

April 27, 2011

AIG Insurer to Pay $42.5M to Cleanup Sites of Bankrupt Underwear Company

Source: http://www.insurancejournal.com, January 10, 2008

The American International Specialty Lines Insurance Co. Inc. (AISLIC) has agreed to pay $42.5 million to clean up contamination at four industrial facilities run by a bankrupt insured in a suit in which the Department of Justice intervened on behalf of the Environmental Protection Agency and other agencies.

The EPA says the case is a reminder to insurance companies that they can be responsible for their bankrupt clients’ contaminated sites.

The four sites, formerly owned by Fruit of the Loom, which filed for bankruptcy nine years ago, are located in Michigan, New Jersey, and Tennessee.…

March 9, 2011

Apex waste plant insured by AIG units

Source: http://www.businessinsurance.com, October 6, 2006
By: Roberto Ceniceros

The operator of a hazardous materials facility that burned late Thursday, forcing the evacuation of thousands of residents near Raleigh, N.C., has a pollution liability policy with a $28 million aggregate limit issued by American International Specialty Lines Insurance Co., among other coverages, documents show.

American International Specialty Lines is a unit of New York-based American International Group Inc. The pollution policy also provides limits of $24 million for each claim, with coverage provided from August 2005 to August 2008, according to an EQ Holding Co. certificate of insurance.

Wayne, Mich.-based EQ-The Environmental Quality Co. is a privately owned company that operates the Apex, N.C., toxic waste handling facility that erupted into flames late Thursday. The facility manages, packs and transports a variety of chemical waste products, and the fire raised concerns that released fumes could be toxic.

Local officials asked about 17,000 people to evacuate the area around the plant, but only about 4,000 had done so Friday afternoon, a spokesman for Wake County said.

EQ’s certificate of insurance shows that its coverage was placed by Willis of Michigan Inc., a unit of Willis Group Holdings Ltd.

EQ also has a commercial general liability policy from Commerce & Industry Insurance Co. with a $1 million limit for each occurrence and a $2 million general aggregate. Commerce & Industry Insurance Co. is also an AIG unit. It also purchased excess liability on an occurrence policy form from American International Specialty Lines. That policy provides $10 million per occurrence with a $10 million aggregate.

Lexington Insurance Co., another AIG unit, also provides EQ with an excess umbrella policy with $15 million in aggregate limits and for each occurrence, the certificate of insurance shows.

AIG declined to comment.…

February 23, 2011

Chinese Drywall Case Moves Forward, Could Test Pollution Exclusion

Source: BestWire Services, February 22, 2011
Posted on: http://envfpn.advisen.com

Insurers could be facing a test of their pollution exclusions as the complex multidistrict litigation involving allegedly defective Chinese drywall moves forward.

Judge Eldon E. Fallon of the U.S. District Court for the Eastern District of Louisiana rejected eight commercial general liability insurers’ contention that the lawsuits should be dismissed because the subcontractors who purchased the insurance policies for the plaintiffs were not named in the lawsuits.

Millions, if not billions, of dollars are at stake, said plaintiffs’ attorney Robert M. Horkovich, of Anderson Kill & Olick. “Thousands of houses are involved in the class action,” Horkovich said.

The lawsuits may come down to how the court interprets the insurance companies’ pollution exclusions.

Late last year, Fallon ruled in favor of 10 homeowners insurers who had asked that the cases against them be dismissed. Fallon ruled that coverage was barred under the faulty materials and corrosion exclusions contained in the policies (BestWire, Dec. 22, 2010).

However, Fallon also ruled the homeowners insurers’ pollution exclusions did not apply to drywall in homes, saying the exclusions were intended to cover environmental issues, according to his ruling.…

November 29, 2010

Big Dig Lawsuit Settled for $9M

Publication Date 11/23/2010
Source: Boston Globe, The (MA)

Trooper died after hitting handrails; Official had been told of possible risks

The Massachusetts Turnpike Authority and several other defendants have agreed to pay $9 million to the family of a state trooper who died when his motorcycle slammed into Big Dig handrails, whose design has been called a safety hazard and a factor in the deaths of six other motorists, according to court records

Newly obtained documents also show that the US Department of Transportation warned the director of the Big Dig project about the safety of the railings in 1992, but the director responded that the rails were safe.

State Trooper Vincent Cila was one of seven motorists and passengers killed when they struck the handrails lining the Big Dig tunnel system between 2005 and 2008. Most of the seven victims were dismembered in the accidents; one other person lost an arm and survived.…