Aon Environmental Assists Redevelopment of Former Army Base |
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Aon Corp.
200 E. Randolph
Chicago, IL, 60601
USA
Press release date: April 26, 2007
CHICAGO, April 26, 2007 -- Old Army bases never die; they are just re- developed.
That process can be more complex than it sounds when you're dealing with 3,500 acres littered with exploded and unexploded munitions. For the first time, Aon, the private sector and the insurance industry have joined forces to develop an insurance product to cover this most specific of risks.
Aon's Environmental Services Group, representing its client, LFR Inc./Weston Solutions and the Fort Ord Reuse Authority (FORA) in conjunction with American International Group, have created an insurance product that mitigates the risks inherent in preparing a 3,500 acre area contaminated with unexploded munitions for a multi-million dollar mixed-use development. The former military installation is on the EPA's "national priorities" Superfund site list.
"This program needed an innovative contracting structure coupled with a unique environmental insurance product which prefunds the cleanup costs. Aon was able to navigate the complexities of the deal while addressing the needs of all the stakeholders," says Frank Lorincz, chief executive officer of LFR Inc. "In fact, the team worked so well together in defining the program I wouldn't be surprised if this became the model for remediation of other federal lands and Department of Defense sites around the country."
Monterey County's Ft. Ord, a former U.S. Army military installation, was closed as part of the U.S. Defense Department's Congressionally-authorized Base Realignment and Closure (BRAC) initiative. The California legislature subsequently created the Fort Ord Reuse Authority to oversee the redevelopment.
Before FORA's reuse plan -- which encompasses everything from endangered species habitat conservation to retail, residential and light industrial development -- can be implemented, the site must be decontaminated.
"The unexploded ordnance and munitions represent a clear and present danger to the developers," says Aon Environmental Services Group Managing Director Greg Schilz. "There was no specific insurance product available to address development cost overruns that could result from the presence of this hazardous material. We worked for two years with a team from LFR/Weston and FORA to develop a product to protect a multimillion-dollar development investment over 15 years. AIG came on board after a competitive bid process. This has never been done before."
"We're in the business of trying to figure out solutions to client problems," said Joe Boren, CEO of AIG Environmental. "While we have worked at many U.S. military bases, this presented a new and unique opportunity that we were able to get comfortable with and should be the prototype for similar problems at similar bases at other parts of the country."
Schilz says other military sites have involved ordnance removal, but none have been as a result of this sort of public-private partnership, and none on this scale. "When we first went to market we were looking for more traditional environmental insurance products," he says. "But we found there wasn't a product designed to meet these needs." The end result is an insurance product with limits of $125 million over a 15-year period.
Michael Houlemard, executive director of FORA, states "The 3,500 acres will offer great opportunity for additional commercial and retail development as well as a full array of housing. We're very happy with the end result being such a positive benefit for the safety of all the citizens of the Monterey region."
While there is no heavy artillery at the site, Schilz says fully decontaminating the area will require the removal of a broad range of munitions.
About Aon
Aon Corporation (http://www.aon.com/) is a leading provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. There are 43,000 employees working in Aon's 500 offices in more than 120 countries. Backed by broad resources, industry knowledge and technical expertise, Aon professionals help a wide range of clients develop effective risk management and workforce productivity solutions.
For more information
Al Orendorff,
312-381-3153,
al_orendorff@aon.com
Source: Aon Corporation
Web site: http://www.aon.com/
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