Captives & Escrows

Providing Environmental Coverage through Escrows, Captives and other Alternatives was invented of necessity following the 2011 collapse of the Cost Cap market. The Alternatives have already been approved at the highest level (e.g., by EPA’s Administrator and California’s Governor). Alternatives created and applied to help the U.S. Military transfer or acquire contaminated property in 2012, 2015 and 2018 led to EPA’s first “National Federal Facility Excellence in Site Reuse Award” and, separately, to 2018’s largest ($1.7B) Brownfield redevelopment.

Although the U.S. had no captives until the 1980’s, they offer so many advantages particularly in hard-to-insure areas such as Environmental that, by 2014, captives collectively received more than half of all property and casualty insurance premiums. In the environmental arena and particularly on larger projects, captives should at least be considered as a substitute for Traditional insurance.

Protected Cell Captives: Clients can use their own captive insurance subsidiaries — already owned by over 95% of Fortune 1,000 companies — or “rent” a Cell within a Protected Cell Captive (PCC), thus access pre-existing but customizable policy forms; underwriters and claims professionals; and/or treaties with A-rated fronting insurers and/or reinsurers. PCCs provide benefits of captive ownership at a fraction of the administrative and financial costs of creating (or sometimes even simply using) their own.

More information on the subject is in this 2015 article by BDCI Principal Michael Hill.