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Going Green! Understanding the Risks and Liabilities of Green Building

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November 13, 2009
Organization: Edward Gentilcore of Duane Morris and James L. Bly of Marsh


5 Key Opportunities and 5 Key Risks that Should be Recognized When Pursing a Green/Sustainable Building Project

Opportunities

  1. Enhanced efficiency in the performance of the building.
  2. The potential tax credits given to certain of these structures.
  3. The potential for expedited permitting/review of building.
  4. Expectation of enhanced tenancy/occupancy.
  5. Societal recognition of building.

Risks

  1. Inadequate discussion/agreement on project objectives.
  2. Lack of understanding of what models of green achievement are available and criteria for achievement.
  3. Mistaking third-party rating achievement as universally representing green performance.
  4. Lack of contractual definition of responsibilities of performance/allocation of risks.
  5. Uncertainty of technological performance/availability of materials/means/methods.

Green Built Insurance Market Update

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  • The insurance industry is on a steep learning curve. But, they are considerably more interested and involved than they were a year ago. That trend should continue, barring unforeseen risks and/or claim activity.
  • The property marketplace has been the most proactive. Each market handles the risk and coverages slightly differently.
  • It is important to understand your risks and compare coverages and services, accordingly.
  • All markets will evaluate contracts careful.
  • Green contract management is of the utmost importance. Carriers are beginning to offer support in this area.
  • Be prepared to discuss your green risks and risk mitigation techniques with all of your underwriters.
  • If you are involved in green building, this will become of increasing importance to them.

Green Building: Feedback from the Construction Industry

  • To date there has been widespread interest in green-ƒƒbuilt benefits, but not as much attention devoted to the risks.
  • To that end , Marsh solicited this feedback from the industry by holding four green risk mapping forums in the U.S. in 2008-2009.
  • 55 executives attended - representing owners, design firm, and contractors.
  • They identified and mapped risks that applied to 10 Risk Categories. The top five categories were: financial, standard of care, performance, consultants and subs, and regulatory.
  • Awareness of these risks will help the green built and ƒƒthe insurance industries create risks management solutions, several of which were addressed in this session.

To Learn More...
Contact Jim Bly, Marsh at 412-552-5028 or [email protected] or Edward Gentilcore, Duane Morris at 412-497-1007 or
[email protected].


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