How I Underwrite a Complex Site Pollution Deal

Alasdair Cameron, National Fixed Facilities Practice Leader, VP. 

People often assume underwriting environmental risk is about finding contamination. It isn’t. Most of the time, the contamination itself isn’t the primary problem. If contamination were the point, Google Earth and a Phase I would do most of the work.

Underwriting a complex site pollution deal, especially a transactional one involving legacy sites, is really about something else entirely. From the carrier perspective, my job is to understand what environmental risk actually remains after diligence and contractual allocation and then determine whether that risk can be responsibly transferred through insurance. I’m not trying to insure everything. I’m trying to identify the specific uncertainty that could become a future claim, whether that’s migration, regulatory action, or indemnity failure, and structure a policy that responds to that without funding known remediation or long-term stewardship obligations. When that’s done well, insurance becomes a very effective tool for facilitating transactions because it replaces uncertainty with a defined and capital-backed solution.

Here’s how I think about it.

Step One: I Ignore the Ominous Words (at Least at First)

• “Superfund”
• “Legacy contamination”
• “EPA oversight”

These words trigger understandable reactions, but underwriting them at face value leads to poor decisions. That’s how you end up pricing uncertainty as if it’s active risk, or excluding things that are already controlled and stable. I care far less about the label attached to a site and far more about what phase of its life the site is actually in.

Is this an active remediation site with uncertain endpoints, or is it a mature remedy, capped, controlled, reviewed every five years, and firmly in an operations-and-maintenance phase?

Those are radically different risks. If you don’t distinguish between those phases early, everything that follows, including pricing, structure, and coverage intent, starts from the wrong place.

What I’m Actually Looking At

At a high level, my questions are pretty straightforward, which is exactly how I like them. Because when these deals go wrong, it’s rarely because no one asked the right questions. It’s because the answers weren’t interpreted correctly.

Is the remedy complete?
Not “politically complete.” Actually complete.

Are exposure pathways controlled?
Engineering controls, institutional controls, deed restrictions, pick your tool. If people and the environment aren’t exposed, that matters.

What does the Five Year Review actually say?
I read them. All of them. Not just the executive summary.

Is contamination stable, migrating, or doing something creative?
“Stable and localized” is music. “Emerging plume dynamics” is not. 

The specific deal I had in mind had a very comforting quality. It was boringly predictable.

• Known contaminants
• Known remedies
• Known controls
• Known monitoring programs
• Known institutional constraints

In other words, the opposite of an open-ended environmental horror story.

What I’m Worried About (And What I’m Not)

Here’s the important bit: I’m not so worried about unknown pollution hiding under the site like a landmine. I am worried about anyone expecting the insurance policy to quietly fund:

• Cap maintenance
• Ongoing Groundwater monitoring
• Institutional control compliance
• Routine operation and maintenance tied to an existing remedy

Those are not insurance risks. They are known, ongoing stewardship obligations, and treating them otherwise is how environmental insurance gets misused. That’s where expectations drift. The policy gets asked to fund what was never meant to be transferred in the first place.

That said, and this is a critical distinction, I am sometimes very deliberately focused on regulatory evolution. If a condition is fully compliant today and later becomes non compliant solely because the regulatory standard tightens, that is not poor site management, it’s a reopener risk. Under the right structure, that risk is both legitimate and insurable, and it’s something I will absolutely contemplate covering.

The line I draw is intentional:

• Known remedial obligations → not insurable
• Known + uncertain → sometimes insurable (with structure)
• Unknown / contingent → core insurable risk
• Regulatory evolution / reopeners → likely insurable

That distinction is the cornerstone of reopener coverage. Get it wrong, by excluding too much or covering routine obligations by accident, and the policy stops doing what it’s meant to do.

Why Structure Beats Exclusions by a Mile

You’ll notice something deliberate in how this type of policy is built.

Instead of broad, blunt exclusions like:

• “Capital Expenditures”
• “Development Activity”
• “Remediation Costs”

We have to become much more precise.

There are endless ways to address coverage without defaulting to blunt exclusions, and in practice that almost always means manuscripting. I genuinely can’t remember the last complex deal I wrote that didn’t include at least one manuscripted endorsement, and usually several.

None of this is exotic. It’s just underwriting done properly. Where deals tend to break is when structure is forced to follow generic exclusions instead of being built around how the site actually behaves.

The goal isn’t to win points for creativity, although absent fire sale pricing, creativity often wins. The goal is to align coverage with how the site works, how regulators behave, and how claims really arise. When structure is doing the heavy lifting, the policy can be both responsive and disciplined without having to exclude its way to irrelevance.

It’s surgical. Underwriters should like surgical.

The PSA Is Always Trying to Ruin My Day

Transactional deals come with Purchase and Sale Agreements that often demand:

• No contaminant-specific exclusions
• Broad insured contract coverage
• Waivers of subrogation
• Policy terms inconsistent with what the market will offer

That’s fine. That’s the job.

But PSA compliance does not mean abandoning underwriting discipline. It means meeting commercial requirements while being extremely clear about what the policy is, and isn’t meant to do. The risk is when PSA language starts defining coverage instead of informing it. That’s when you lose alignment between what’s being sold and what the risk actually is.

However, sometimes the PSA requirements are drafted in such a way that they are just not commercially realistic, no matter how keen an underwriter is to put premium on the books. And that is when our role is to educate (politely and tactfully) and suggest alternative structures that can realistically find a home in the environmental marketplace.

Clarity beats cleverness. Every time.

PFAS: Yes, I Thought About It

If you’re wondering whether PFAS kept me up at night, the honest answer? Only if I have nothing else to worry about (rare).

Why? Frequently it is:

• Not identified as a contaminant of concern
• Not driving the existing remedies
• Not the subject of site-specific enforcement
• Any long-term regulatory obligations tied to remedies are already excluded elsewhere

If PFAS shows up in an unforeseen, site-specific way later? That’s a different discussion, and exactly the kind insurance is meant to respond to. That’s when it becomes a coverage conversation, not a screening issue.

What I Love About Deals Like This

• Predictable risk
• Mature remedies
• Clear regulatory history
• Policies that do what they’re supposed to do - no more, no less

These are the deals where environmental insurance actually shines: supporting transactions, unlocking capital, and letting parties move forward without rewriting environmental history.

What I Don’t Love

• Treating “Superfund” like a synonym for “uninsurable”
• Pretending known stewardship costs are surprise losses
• Over-excluding until the policy becomes decorative

If the answer to every underwriting question is “exclude it,” you’re not underwriting, you’re opting out.

And Then There Are Those Deals

Of course, not every site is refreshingly boring.

Some redevelopment and transactional deals are anything but. They are messy, compressed, lawyer dense, regulator curious, and operating on timelines that suggest optimism bordering on fiction. Multiple historical operators. Patchwork data. Overlapping indemnities. A PSA that reads like it was negotiated at 1:30 a.m.

These are not slow burn risks.
They are the textbook definition of a ticking bomb.

And yet, here’s the part that often surprises people, we can underwrite those too.

Not with a mythical silver bullet. Not with a policy that magically reconciles thirty years of environmental history or absolves everyone of responsibility. But often with something genuinely useful: targeted coverage that transfers a specific slice of risk, stabilizes a transaction, or allows capital to move where it otherwise wouldn’t.

Think of it less as a cure all and more as the right tool for a very specific job.

When deals are truly complex, the question isn’t “Can insurance fix this?” It’s “Which risk actually needs to be fixed, and which risks simply need to be understood and lived with?”

That’s where real underwriting lives.

And yes, even in the middle of a complete redevelopment cluster, you’d be surprised how often there’s still something we can responsibly insure. The short version is that these deals are rarely elegant, never simple, and almost always unfold in ways no one predicted at closing. The longer version, including the traps, the tradeoffs, and the occasional moment where everything somehow still works, is best saved for a future blog post.

Final Thought

Good site pollution underwriting isn’t about optimism or pessimism. It’s about honesty, about the site, the remedies, the regulations, and the role insurance plays in the middle of all that.

When the risk is understood, controlled, and properly structured, even the scariest-sounding sites can be… well, refreshingly boring.

And that’s usually my goal.