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We have unique experience in project preparation and supervision for the World Bank and Asian Development Bank, and in risk assessments for environmental insurance in a wide variety of industries. We can provide services in development and supervision of environmental loss control programs as well as due diligence site inspections for acquisitions. We can assess a corporation's ability for environmental management and develop the action plan to bring industrial facilities and management up to international standards. These services can be applied to privatization, and in conjunction with an insurance product, raise the value of the bond issue.

Our latest projects include development of the environmental components of World Bank assisted state power restructuring (privatization) projects in India: Rajasthan, Uttar Pradesh, Orissa, Bihar and Haryana. We've also recently been involved in hydropower and coal projects in India, China, Nepal, Mongolia, Indonesia and Vietnam.

We have the following approach to providing technical services to evaluate environmental insurance risks, and to underwrite the environmental aspects of privatization. We have included the social as well as the technical environmental aspects in this same discussion:

The challenge of industrial underwriting in the developing world:

The international market will present new challenges for the insurance industry; nevertheless, we believe the business can be profitable, drawing on the experience of the approach we've taken in our consulting for the World Bank. Environmental management is not part of the daily operations of industrial facilities in the developing world, in fact, typical daily operations are creating an ever more serious morass of large scale environmental contamination. This state of affairs would not go well for an environmental insurance product, without: i) legitimate, truthful surveys of existing conditions; ii) site specific environmental action (loss control) programs, and; iii) establishment of environmental management capability within the insured corporations, at plant and corporate levels. This last usually requires technical assistance. The World Bank experience has also shown that actions expected of their clients must be periodically supervised.

photo Oil Spillage to Bare Soil Inside Containment Dikes and Surrounding an Oil Storage Area

It has been our experience that virtually all existing industrial sites in the developing world (and Eastern Europe) will have ongoing environmental contamination problems, due to the lack of environmental management awareness and capability. There are most often unresolved social problems with the adjacent communities as well. (We have a slide show to illustrate environmental management at power stations in India).

photo Lack of Proper Maintenance of Electrical Panel: Safety and Fire Hazard

New facilities, when managed in the typical manner, soon become locations of serious environmental contamination. In our work for the World Bank we have performed site surveys, as well as assessments of institutional capability for environmental management. From these we've developed programs for institutional strengthening for environmental management and resettlement, along with site specific environmental action plans (loss control programs) and community development plans. We highly recommend the same type of approach for environmental insurance products, as well as multinational corporations contemplating operations overseas.

Periodic supervision, in conjunction with technical assistance begins the cultural change to awareness and improvement of environmental and health and safety management, community relations, and would greatly improve insurability of the risks. Financial losses from fires, other industrial accidents, and lost time can be controlled. With improved insurability, there would be an opportunity to be more competitive with rates.

With regard to the social aspects, political risk and community relations, Dr. Tod Ragsdale has extensive experience in social assessment (including resettlement) and community consultation and relations. An aspect to consider here is the private sector's enlightened self interest in policies addressing the social effects and mitigation of downsizing. These issues are important to the insurance industry in promoting a social environment conducive to the long term stability of private investments in the Third World and Eastern Europe.

We can provide the insurance industry as well as multinational corporations with experience in environmental and social site surveys, environmental action (loss control) plans, community relations plans, and the planning and management of the required institutional strengthening. This approach is quite similar to the work we've been doing for the World Bank on some very large projects; the National Thermal Power Company (NTPC) in India was the World Bank's largest (dollar loan wise) implementing agency as of loan effectiveness in 1992. There was little environmental awareness, and less environmental compliance in the organization in 1992. We surveyed all the power stations involved in the NTPC time slice project, developed corporate and site specific environmental action plans (resettlement and rehabilitation, community development, industrial loss control, health and safety and institutional strengthening for environmental management), and reviewed all environmental impact assessments for the new projects. The environmental and social action plans were computerized for tracking and supervision. We've cost effectively supervised over 16,000 Megawatts of power plant construction and expansion for this project and others since 1992, including technical assistance for the growth of institutional capability for environmental management. NTPC has been quite receptive to our "pragmatic approach" (their words), corporate and power station environmental management and health and safety organizations have been established, and NTPC power stations would now be much more insurable risks.

photo Accident Potential: One-Ton Chlorine Cylinder Connected to Garden Hose Without a Regulator

These are the challenges we see in providing an environmental insurance product in the developing world, where one cannot rely on the oversight of an environmental regulatory infrastructure, and where there is most often little awareness or capability for environmental management within the corporations and production facilities. It is precisely because of these conditions that an environmental insurance product, in our opinion, would be attractive to investors in this arena. The market is huge, untapped, and expanding.

We believe there is much to gain from the World Bank's experience and approach in the environmental aspects of doing business in the developing world. It is much different than doing business in the developed world, especially environmental business!

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