Environmental losses suffered by commercial and residential real estate owners are becoming more frequent and severe due to evolving regulatory regimes and the changing global climate. This article reviews the nature of environmental risk, specifically within the context of a changing climate, and proposes the large-scale installation of green infrastructure as both a business opportunity for insurers and a responsible approach.
INTRODUCTION
Owners of commercial and residential real estate face a myriad of hard-to-predict environmental risks, such as bodily injury due to asbestos exposure, mold contamination, fuel spills, on- and off-site hazardous waste disposal, and indoor air quality issues. These risks have the potential to cause catastrophic financial losses and public relations disasters. To help mitigate exposures of commercial and residential real estate owners, insurers have begun to develop comprehensive environmental coverage, such as the General Real Estate Environmental Enterprises Net (GREEN) Program. Despite the effectiveness of these programs, insuring against environmental losses is likely to become increasingly complex due to the imminent impacts of climate change.
