Alternative Risk Transfer (ART) products are risk transfer mechanisms that are alternatives to conventional insurance. EIA can use ART products, often in combination with conventional insurance products such as site pollution liability policies, to solve the major problems in brownfields redevelopment: the small sites and long term stewardship problems. ART mechanisms include:
Guaranteed fixed price remediation contracts (GFPR’s). GFPRs indemnify site owners or developers for cost overrun liabilities. EIA is associated with engineering companies who are willing offer to GFPR indemnifications for overruns above small remediation costs, i.e., $1 million or under, and for which cleanup cost cap insurance is generally unavailable.
Captives and pooling arrangements. Captives allow single corporations to self-insure through an insurance company they own. Group captives/pooling arrangements allow groups of companies, e.g., members of an association, to insure each other and share losses up to a high deductible and purchase reinsurance for catastrophes. Pooling arrangements solve the small sites problem by allowing coverage for aggregated small cleanup costs of multiple sites. They have many other advantages as well, including reduced premiums and costs and focused risk and claims management.
Structured settlements. Structured settlements use annuities to cover known cleanup and monitoring costs over a long term period where there is a fund available upfront for such coverage. EIA can provide a complete long-term liability assumption by combining structured settlements with an automatically renewable site pollution liability policy with coverage for institutional/engineering controls liabilities.