What's A Green Building Reputation Worth?
How did we all miss this? While AIG may have had its problems recently, it certainly has created an innovative green building insurance product:
The reputation coverage provides up to $50,000 in coverage, per occurrence, when a green building experiences adverse publicity. It also provides funds to employ crisis management specialists to manage adverse publicity; guide and counsel key company personnel; and provide other services to assist in restoring a company’s reputation.
Did you know you can get insurance to cover you if your green building project goes awry? Obviously, I would have to read the exclusions (I haven't), but theoretically I could envision that the AIGRMGreen Reputation Coverage would cover your project if it failed to achieve LEED certification.
In order to offer particular coverage, an insurance company has to be able to measure the risks and potential damages. How do you measure the damages from bad publicity resulting from a green building project?
Any AIG readers out there? I would love to talk to you about this coverage!
Photo: happymichaelchung
The insurance company would probably ask for evidence of business lost as a result of the damaged reputation. For example, tenants that break their lease b/c the building lost its LEED status; or tenants who decide not to sign b/c of the lost status. I believe that the coverage form pays for additional advertising & PR that the property owner must purchase in order to protect or rebuild its reputation. I can probably arrange for someone from their Underwriting Department to answer some of these questions for you, if you're interested in pursuing further.
@Jimmy Norton - Yes, please make arrangements! I would love the opportunity to talk to someone at AIG about this product. Good publicity for them too. Thanks.
From GRELJ, discussing the most recent Marsh report that surveyed A/E/C execs about green building risks:
"The top five risk categories that were identified during the forums were finance, standards of care and legal, building performance, project consultants and subcontractors, and green building regulations; each of these fell either in the likely or moderate risk profiles (finance, standards of care, and performance were the top three, all of which were in the likely profile, which translated into likely to occur at least once every three years. The lowest risk category? Brand and competitive edge or reputation (which is interesting given the new product from AIG that provides coverage (in the form of a lump sum payment and counseling services) for loss of reputation if a green building project fails to achieve third-party certification)."
http://www.greenrealestatelaw.com/2009/07/marsh-report-offers-construction-industry-feedback-on-green-building-risks/
Navigating the intricacies of AIG/AIU Holdings/now Chartis Insurance is rather difficult since the bailout. Jimmy and I will look to uncover the nuances of the Green Reputation & Restoration form. Industry insiders view it as perfume on a pig, but I will know more once I read the actual policy form and how coverage is triggered.
@Stephen Del Percio - Thanks for pointing out the Marsh study's discussion of the AIG product. The study has been sitting in my to do list so I appreciate pointing that out.
@Mark Rabkin - "Perfume on a pig." I like that. Let me know what you think once you have had a chance to review. Thanks.