XL Specialty Insurance said it is the first carrier to be qualified under recently revised requirements of a Massachusetts program subsidizing insurance coverage for developers of previously polluted sites.
The XL said it won approval after changes were made in the brownfields insurance program known as Massachusetts' Brownfields Redevelopment Access to Capital (MassBRAC).
Thomas Barry, director of MassBRAC, said in the past American International Group was the sole provider of environmental insurance to the program because it gave preferential pricing on the insurance.
However, this arrangement ran into criticism, he said. Critics said it was interfering with the free market exchange of insurance products.
This year, the program was opened to other insurers who met two criteria: at least five years experience with environmental exposures, and a Standard & Poor's rating of "A" or better.
Five carriers qualified and were invited into the program: XL, AIG, ACE, Zurich and Chubb.
While XL is the first to be qualified for the program, AIG and ACE will be included, Mr. Barry said. Zurich has declined the invitation, and Chubb is still in negotiations with the agency, he said.
Those insurers involved in the program give a mix of coverage, depending upon their comfort level. However, the agency lost its preferential pricing and now subsidizes policies at market price, he said.
Under MassBRAC, which went into effect in 1999, a developer purchasing a brownfield site has their environmental insurance program subsidized by 50 percent of the purchase price up to $50,000 for private projects, and up to $150,000 for public, municipal and government projects.
XL said it would provide coverage for loss, remediation expense and legal defense that may result from sudden and gradual pollution conditions at or from covered locations.
A brownfield is a property where a hazardous substance, pollutant, or contaminant is present or suspected and a developer wishes to develop the site.
According to the U.S. Environmental Protection Agency, cleaning up and reinvesting in such a property takes development pressures off of undeveloped, open land and both improves and protects the environment.
XL Specialty Insurance Company is part of Bermuda-based XL Capital. More information about XL Capital Ltd is available at www.xlcapital.com.
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