Environmental policies seen as mainstream.

• Author: Marshall, Jeffrey
• Position: Pollution liability insurance

There's been a surge in environmental insurance policies in the past five years, for a number of reasons: they've become standard in mergers and acquisitions and real estate transfers; sectors like technology are no longer considered environmentally benign; and the Sarbanes-Oxley Act has spurred companies to re-examine their risks and the way they disclose them.

Those were among the key points covered in a winter Web seminar presented by David W. Bennink, director of Aon Environmental, and Andrew N. Davis, an attorney with Laboeuf, Lamb, Greene & MacRae LLP. Both say that environmental insurance--now frequently written for up to $50 million per policy by major firms like The Chubb Corp., American International Group (AIG), ACE (The Ace Group of Cos.), Zurich North America Insurance Co. and XL Insurance (XL Capital Ltd.)--is often the "glue" that helps hold real estate sales and mergers together. Terms are often highly flexible, they say, but it's incumbent on executives to make sure that any unique nuances of the transaction are factored into the design of the coverage.

Bennink said that the market for environmental insurance has been growing at a rate of 10 to 20 percent a year, and has now reached $2.5 billion annually. Policies can cap remediation or toxic tort costs and supplement directors and officers' (D & O) coverage.

Environmental...