Managing the environmental liabilities associated with thepurchase, sale and development of properties can be an extremelycostly and complex task. Property managers and real estatedevelopers must be vigilant in identifying and monitoringenvironmental risks to avoid losses.

The environmental due diligence process seeks to identifypotential liabilities. An essential step is evaluating the propertyfor contamination–a stage that typically generates a staggeringvolume of environmental site assessments, regulatory correspondenceand other legal documentation to review and retain.

Traditionally, managing this mountain of environmentalinformation has been a daunting task. Today, however, technologyprovides organizations with the ability to effectively manage themultifaceted environmental due diligence process and, at the sametime, streamline the environmental insurance submission and renewalprocess.

Environmental liability insurance has been around for more than20 years, but today there is increased acceptance of this coverageoutside the environmental sector.

When acquiring or divesting property, companies are increasinglyconcerned about potential environmental liabilities. With anincreased number of high-profile cases related to these issuescoming to light, companies are now more aware of the significantlosses that can be involved, and as a result, more organizationshave begun to leverage environmental liability coverage to limitexposures.

When a property is contaminated, the remediation (site cleanup),regulatory compliance and clearance, fines and penalties forviolations, and potential third-party legal actions can costtens-to-hundreds of thousands of dollars. With severe contaminationcases, expenses can total tens of millions of dollars.

A company could be financially crippled to the point ofbankruptcy if burdened with this level of loss, which is why morecompanies are employing environmental liability insurance.

New Web-based software programs have been specifically designedto help manage this procedure. By electronically documenting andtracking any environmental sampling data, including Phase I andPhase II site assessments, companies can monitor the potentialexistence of pollutants.

When contaminants are found, these systems help to lead anenvironmental remediation team toward site compliance and clearancewith regulatory entities. The systems track each step of theremediation process, so property owners can more easily resolveconflicts over indemnities and regulatory actions.

These tools also help to ensure proper environmental liabilitycoverage is secured as they monitor changes to policy terms andconditions and manage any claims that may manifest from theproperty. In addition, such systems are valuable data managementtools and may serve as a centralized repository for variousenvironmental documents.

For example, property asset managers have real-time access tothe environmental coverage policies, endorsements, enhancements,deductibles, limits, exclusions and claims history for individualproperties, as well as information on the aggregate portfolio.

The Web-based systems are highly configurable and can becustomized to display all asset details and associatedenvironmental data. In addition, companies are able to manageenvironmental issues for current properties as well as potentialacquisitions.

In terms of the environmental coverage process, the amount oftime saved by utilizing these systems is astronomical. In the past,property owners and real estate developers used spreadsheets andpaper-based processes to collect and track environmental issues andrisks. At renewal time, they either copied environmental documentsor scanned them onto a CD and sent them to the underwriter andunderwriting engineer.

Representatives from competing markets would sometimes need totravel to review hundreds of environmental documents. The entireprocess was costly, cumbersome and time-consuming.

With Web-based software, environmental data is now uploaded andprovided to underwriters in a matter of minutes, rather than weeks.Online access is granted only to authorized individuals, who areprovided with a secure username and password to protect theconfidentiality of information. In this way, the broker andcompeting carriers are able to view–in real time–site details anddocuments from the convenience of their offices.

Various stakeholders can be authorized to safely access theinformation, including asset managers, remediation experts andunderwriting engineers.

There are increased efficiencies through automatic scheduling ofreports and distribution of e-mail alerts that notify assetmanagers of predefined risk events, such as the existence ofnoncompliant locations and detection of new contaminants.Ultimately, data is owned by the property owner, with completeportability regardless of broker or insurer relationships.

Tracking the environmental liabilities associated with realestate transactions can be extremely complex. As the industry movestoward a more sustainable approach to developing and re-usingproperty, Web-based software helps to facilitate the environmentaldue diligence process and secure adequate liability insurance inthe event that contaminants are found and remediation isrequired.

Native Internet technology serves as a collaborative platform towarehouse and share environmental, legal and regulatory documentsrelated to the property. Companies should consider an enterprisesolution that provides environmental capabilities as part of a morecomprehensive risk management approach, so they can leverage a moreinclusive analysis of their risks and exposures.