Chris Bunbury, eS Environmental Risk Managers, Inc. Email: jcbunbury@aol

1. WELCOME Chris Bunbury, eS Environmental Risk Managers, Inc. Email: jcbunbury@aol.com Phone: (231) 256-2122 Fax: (231) 256-2123 PO Box 1127 Leland, MI 49654 www.EnvironmentalRiskManagers.com

2. ENVIRONMENTAL RISK MANAGEMENT AND INSURANCE STRATEGIES FOR MANUFACTURERS

3. EVERY MANUFACTURER IS IMPACTED BY ENVIRONMENTAL EXPOSURES

4. What is a pollutant? • A material, substance, product…. introduced to an environment for other than its intended use / purpose. • Fresh water • Cheese

5. Environmental Liability Exposures If a manufacturer waits until an environmental problem occurs and any governmental body gets involved, the cost to address the environmental problem will increase on an average of 35% to 50%

6. To be sustainable / transparent you start with risk management • Purchasing raw materials • FOB point of shipment? • FOB point of delivery?

7. Environmental Liability Exposures Impacting Manufacturers

8. Potential Environmental Exposures Impacting Manufacturers • Air emissions • Toxic Release Inventory (TRI) chemicals • Industrial and hazardous waste • Product cleaning and chemical treatment • Asbestos and lead • Loading, unloading, and transportation exposures

9. Potential Environmental Exposures Impacting Manufacturers • Vapor Intrusion • Raw materials stored and utilized in operations • Storm water runoff • Natural resource damage • Spills from underground or above ground storage tanks • Old equipment storage (bone yards)...

10. Environmental Liability Insurance Coverage Overview For Manufacturers

11. 98% of US businesses are “small business” that can’t afford to self insure their environmental exposures

12. 3 Main Benefits of Environmental Liability Insurance • Defense costs • Claim management • Third party liability (property damage, bodily injury, • and business interruption)‏

13. Face value of an environmental insurance policy costs the insured tenths of a cent on the dollar, or the insured can wait until a loss occurs and pay 100 cents on the dollar out of their own pocket

14. Also referred to as Pollution Legal Liability (PLL) Site Specific Coverage for new and/or pre-existing unknown environmental conditions First party on site cleanup On site and off site third party bodily injury, property damage and business interruption First and/or third party auto pollution liability Off site disposal coverage GL with products pollution coverage Under ground storage tanks Environmental Impairment Liability (EIL)

15. Property Transfer Coverage • Protects the buyer and/or seller should an • environmental condition be found that was not caused by the new purchaser of the property • Supports the value of the property • Fills in gaps with environmental due diligence • Allows you to negotiate a more favorable loan package

16. Risk Transfer / Risk Funding • For larger insured’s looking to take control of their destiny. Larger Brownfield projects • Blended product involving transferring risk and self funding • Insured develops their own insurance policy and it’s administered by a third party • Have CPA review

17. Transportation Pollution Liability (TPL)‏ • Not the MCS 90 endorsement • Broadened auto pollution liability form CA 9948 • Covers during the loading / unloading and transportation of the cargo • 800,000 tons per day of hazardous materials are • shipped in the United States • How do you purchase your raw materials FOB point of shipment / delivery • Commingling of transported waste

18. Underground and Above Ground Storage Tanks (UST or AST)‏ • Protects for releases from underground tank systems • Does not replace tanks or equipment • Natural resource damages covered?

19. Who are you doing business with? Vendors can create environmental liabilities for you. Do they have the financial assurance to protect you?

20. Contractor Pollution Liability (CPL)‏ • Protects the insured while operating away from • any premises they own, rent, lease or occupy, should they cause or exacerbate an environmental liability. • Contractors conducting: • HAVC work • Equipment, building or grounds maintenance • Millwright work • Construction...

21. Professional Liability (E&O)‏ • E&O coverage for environmental engineers/consultants conducting: • Environmental site assessments • Air monitoring • Waste characterization....

22. A metal manufacturer had been removing oil and grease from their products prior to painting them. The metal goods were passed through a vapor bath of trichloroethylene (TCE) a common solvent. Over time the vapors settled around the plant and at the time of an environmental site assessment it was determined the groundwater surrounding the plant contained significant concentrations of TCE and other solvents. Cost to remediate the site was $900,000

23. While moving a large metal coil, a forklift operator hit a hydrofluoric acid aboveground storage tank releasing dangerous fumes into the neighboring community. Area residents and businesses were evacuated and several people were treated at the local hospital for fume inhalation. Claims for bodily injury and business interruption topped $94,000.

24. A manufacturer stored bag house dust containing heavy metals in an uncovered dumpster behind their facility. Whenever is rained, storm water mixed with the dust forming a slurry, which ran offsite. Testing of a nearby stream bank showed high levels of lead, cadmium and mercury. The contamination source was determined to be the dumpster runoff. The manufacturer was responsible for cleanup costs and natural resource damages in excess of $250,000.

25. A manufacturer used a machine that punched holes in sheet metal. A portion of the machine was located beneath the floor. Over time lubricating oils form the machines moving parts were released into the surrounding soil. A homeowner down gradient from the manufacturer notice their well water smelled like petroleum. Testing of the well water revealed it contained alarmingly high concentrations of petroleum hydrocarbons. The source of the problem was determined to be the leaking equipment. The homeowner was forced to hook up to a municipal water supply. Cost for the hook-up along with claims for bodily injury and remediation expenses exceeded $500,000.

26. A manufacturer began expansion of their production line. During excavation, oily soils with a petroleum odor were discovered. Further investigation uncovered an old undocumented sludge drying pit which the previous owner used back in the 1940’s. The manufacturer had to remove and remediate the soils at their own expense. Cleanup costs exceeded $400,000.

27. A manufacturer stored a drum of caustic chemicals next to a drum of highly reactive acid. When a forklift disturbed the drums, their contents were released, causing a violent reaction. Fumes spread over neighboring properties forcing businesses and local residents to evacuated the area. Business interruption claims form neighboring businesses exceeded $300,000.

28. A chemical manufacturer stored incorrectly labeled drums or raw materials used for the manufacture of dry cleaning products. One day neighbors noticed a thick whitish-yellow vapor cloud emanating from the facility. The fire department was called and after reading the labels on the drums they began to spray them with water. This caused an explosion which released a thick smoke cloud of sulfur dioxide. Forty plaintiffs filed suits to recover damages from injuries suffered from exposure to the sulfur dioxide cloud. Settlement exceeded $3,000,000.

29. A manufacturer used concrete trenches to transport plating line waste to the onsite waste water treatment system. The high acidity of the wastewater degraded the trenches that allowed the wastewater to seep into surrounding soils. Subsequently the soils and ground water were contaminated with heavy metals and solvents used in the plating process. Testing in a nearby stream revealed that fish had high concentrations of metals in their systems as a result of the contamination. Due to this governmental agencies prohibited fishing. A local environmental group submitted a class action suit against the platter for loss of enjoyment of the stream. The group also sued for perceived bodily injury claims of ingestion of the contaminated fish. Total cost to settle the suit and remediate the site exceeded $3,200,000.

30. Conclusion • Environmental exposures impact every manufacturer • Sustainability begins with Risk Management • Most manufacturers can’t afford to self insure their environmental liabilities • Who are manufacturers doing business with that can cause them to experience an environmental loss

31. Thank you for your time. To drive your environmental insurnace sales contact: Parker Bunbury @ parkerbunbury@gmail.com Phone: 231-218-1118 Chris Bunbury @ jcbunbury@aol.com Phone: 231-256-2122 www.EnvironmentalRiskManagers.com