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From supplying support equipment to refueling and de-icing operations to managing fuel storage facilities to hangars, and more, thousands of fixed base operators (FBOs) provide vital support that keep US and Canadian airports operational.  Because of FBOs important role in supporting air travel, AXA XL’s Samantha McCree has developed her expertise to help FBOs remain operational.  As a senior underwriter on AXA XL’s North America Environmental insurance team, Samantha helps FBOs in the US and Canada manage their environmental risks to assure that a spill or other pollution incident does not hinder their operations.  See how she does it. 

   

How did you develop your underwriting specialty focused on FBOs?

 

McCree:   After graduating with a civil engineering degree from Drexel University, I worked at an engineering firm and one of the things I was tasked with was inspecting above and below ground storage tanks. That experience was helpful when I joined AXA XL as an environmental underwriter more than 19 years ago. Many FBOs contend with the effective management and maintenance of storage tanks.  Therefore, my hands-on experience with tank integrity and management was a plus, especially when it came to underwriting environmental insurance coverage for FBOs’ environmental exposures. Having a background in engineering has been very helpful in serving FBOs and underwriting appropriate pollution coverages. Engineers want to know what makes things tick. We’re very observant – and we like digging into the details. That’s what I do on a daily basis.  Over time, I’ve become very familiar with the environmental  risks that my FBO clients face and more importantly, the best ways they can minimize potential environment liability and damage to their reputation and bottom line.

 

What are the environmental risks facing FBOs today?

 

Every FBO is impacted by environmental exposures such as releases from underground and above ground storage tanks, vapor intrusion, de-icing operations, oil and fuel spills. Many FBOs believe that their General Liability (GL) policy will pay for an environmental incident. However, environmental cleanups are typically not covered under GL policies because they often have pollution exclusions

 

Another challenge for FBOs is the fact that they do not own the hangar or the land on which they operate. They lease the facilities and the land from the airport owners who grant them the right to operate at the airport and provide aeronautical services. This presents challenges.  Often the leases include a clause stating that the FBO “is solely responsible and fully liable” for all fuel leaks or spills – and for any damage resulting from the spill. Many also include indemnification clauses requiring FBOs to “hold harmless and indemnify” the airport, the city, the county or any other governing entity - essentially saying that the airport and/or owners are not liable for the FBO tenants’ spills - and perhaps even spills that originate elsewhere on the airport property and migrate onto or under an FBO’s leasehold.  An environmental incident could be enough to force the FBO out of business.

 

How can an FBO’s lease agreement or contract influence an environmental incident?

 

One recent claim comes to mind.  An airport and their FBO used a hydrant system (underground fuel delivery pipeline) for many years. During maintenance of the system, a leak in the fuel hydrant system was discovered. Over a long-period of time, jet fuel leaked undetected. Over time, significant contamination of the aquifer occurred, resulting in a remediation order from the local/ county environmental authority. Although, the airport had initially installed and operated the hydrant system, the current FBO’s contract made it responsible for preventing and responding to spills/releases and overall environmental compliance.  Fortunately, AXA XL’s claims counsel and consultants worked with the FBO and airport to reach a settlement and develop a remediation work plan. A long-term remediation project involving monitored natural attenuation for 20 years was implemented. Costs are expected to exceed $400,000, but are still significantly less expensive than an active groundwater treatment system.

 

How do FBOs benefit from tapping into AXA XL’s environmental expertise?

 

They really like our specialized environmental expertise. We know their business, the risks they face and can offer risk mitigation strategies that fit their specific needs. We don’t just sell them an environmental policy, we ask them to talk about what they do and how they work before we design an insurance plan.  Another big advantage is our environmental claims handling capabilities, particularly remediation services and legal advice to assist in a cleanup, as illustrated in the claims example that I shared.

 

And we’re always looking for ways to improve our service and product offerings.  For instance, because our clients needed financial assurance certificates for state and federal oversight, we recently introduced a unique, three-year certificate to address those concerns.  We’ve also begun expanding our environmental products and services through a special cross-sell effort with AXA XL aviation underwriters. Our goal is to provide environmental coverage and expertise to help our FBO clients and those involved in aviation. There’s still a lot of opportunity out there for environmental specialty insurers like AXA XL - and we have a lot to offer FBOs and the aviation business in general.

 

 

Samantha could talk about FBO environmental exposures all day.  Start a conversation with her.  Contact Samantha at Samantha.mcree@axaxl.com or 610- 968-2929.

 

To learn more, download AXA XL’s white paper, Environmental risks and liabilities facing airport fixed base operators.

See what environmental insurance AXA XL has designed especially for FBOs, HERE

 

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Global Asset Protection Services, LLC, and its affiliates (“AXA XL Risk Consulting”) provides risk assessment reports and other loss prevention services, as requested. This document shall not be construed as indicating the existence or availability under any policy of coverage for any particular type of loss or damage. AXA XL Risk. We specifically disclaim any warranty or representation that compliance with any advice or recommendation in any publication will make a facility or operation safe or healthful, or put it in compliance with any standard, code, law, rule or regulation. Save where expressly agreed in writing, AXA XL Risk Consulting and its related and affiliated companies disclaim all liability for loss or damage suffered by any party arising out of or in connection with this publication, including indirect or consequential loss or damage, howsoever arising. Any party who chooses to rely in any way on the contents of this document does so at their own risk.

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In the US, the AXA XL insurance companies are: AXA Insurance Company, Catlin Insurance Company, Inc., Greenwich Insurance Company, Indian Harbor Insurance Company, XL Insurance America, Inc., XL Specialty Insurance Company and T.H.E. Insurance Company. In Canada, coverages are underwritten by XL Specialty Insurance Company - Canadian Branch and AXA Insurance Company - Canadian branch. Coverages may also be underwritten by Lloyd’s Syndicate #2003. Coverages underwritten by Lloyd’s Syndicate #2003 are placed on behalf of the member of Syndicate #2003 by Catlin Canada Inc. Lloyd’s ratings are independent of AXA XL.
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