Turning green into gold

Program manager Mainstay Insurance shows retail agents how to profit from the green building trend

By Elisabeth Boone, CPCU

As Kermit the Frog lamented in his signature song, “It Isn’t Easy Being Green.”

When it comes to designing and building new energy-efficient, environmentally friendly houses and commercial facilities, being green definitely is not easy—nor is it cheap. Using sustainable products like bamboo flooring and incorporating energy-saving technologies like solar panels is great for the environment, but it can be hard on the wallet.

The good news is that there’s growing awareness among property owners that much of the up-front cost of building green can be offset over the long term by savings in energy use, facilities and equipment maintenance, and even insurance premiums.

According to Dusty Rowland, president and chief executive officer of program administrator and specialty wholesale broker Mainstay Insurance Group, Inc., based in Bellevue, Washington, the green building movement can be a gold mine for retail agents and brokers. A veteran of specialty marketing, Rowland is a co-founder of Mainstay, which launched its operation nationally in 2008 and is carving out a niche by arranging coverage for green properties.

What’s more, Rowland is bringing together leading independent agents and property owners and managers to promote green building practices and environmental sustainability. In September 2009 Rowland and business partner Eric Arthur established the Association of Green Property Owners and Managers (AGPOM), a nonprofit organization that now has more than 500 member locations representing the owners of residential and commercial properties, plus nine prominent agencies and brokerages as charter members.

“We believe that AGPOM is a powerful tool that retail agents and brokers can use to differentiate themselves in the marketplace and bring added value to their clients through image enhancement, premium reductions and utility cost savings,” Rowland says.

Raising awareness

Federal government initiatives like Energy Star and the U.S. Green Building Council’s LEED (Leadership in Energy and Environmental Design) certification program are promoting awareness of the benefits of green building, Rowland comments, and they offer a host of resources to help property owners and contractors understand and implement energy-saving, environmentally friendly technologies.

“Energy Star and LEED are well-respected programs that building owners are using as a platform to lower their energy consumption and improve the efficiency of their buildings, and then gain recognition for their efforts,” Rowland explains.

“Energy Star and LEED have been around for several years and are quite well known,” Rowland says. “With AGPOM, we’re pursing similar objectives, but we’re the new kids on the block. AGPOM was created in response to the perceived need for an entry-level platform that allows the owners of existing buildings to reduce their energy consumption and that provides financial and public relations incentives for changing their behavior,” he explains.

“In our Green Building Plan,” Rowland says, “we have a certification process that’s considerably less complex than Energy Star and LEED and that focuses not on capital investment in the building but on the behavior of owners, managers, and employees. Many people don’t realize that simple changes in behavior can have just as much impact on reducing costs as capital investment.”

Upon confirmation that a member property owner is participating in the Green Building Plan, the owner receives an AGPOM Member plaque for display in the lobby or conference room. The member also receives a member seal to use on its Web site and marketing materials.

“By providing these image enhancement tools,” Rowland says, “we come full circle with our value proposition of using green initiatives to reduce business risk through cost savings, cleaner environments, and an improved image in the marketplace.”

Partnering with AGPOM and Mainstay Insurance is the Bonneville Environmental Foundation (BEF), a nonprofit entity that was established in 1998 to advance the development of renewable energy resources and restore watershed ecosystems. Through its partnership with BEF, Mainstay uses a portion of its revenue to purchase renewable energy credits on behalf of AGPOM member companies that are insured through the association’s proprietary program. Members can purchase additional credits at a discounted price and use them to apply for LEED credits.

AGPOM members also have access to the services of prequalified sustainability consultants and attorneys at discounted rates. In addition, members can use the AGPOM resource library to research topics like energy efficiency, water conservation, waste minimization, and improved indoor air quality. A news-letter, “The AGPOM Quarterly,” keeps members abreast of trends and changes in the green movement. The newsletter is available to retail agents and members for co-branding purposes.

Premium savings

AGPOM has created two versions of its Green Plan: one for building owners and another for tenants. Categories in the plan are general business practices; kitchen/break room/bathrooms; air flow, heating, and cooling; office equipment use; and documentation.

By making a commitment to AGPOM’s Green Building Plan, Rowland says, property owners can not only reduce their facilities’ utility costs and improve their corporate image but also save on their insurance premiums.

“We’ve found that green property owners and managers represent less risk to the insurer,” Rowland says. “Through AGPOM, we’re helping owners and managers make a commitment to a corporate sustainability policy, and we’re addressing the overlap between going green and the management of business risk.”

Retail agencies and brokerages can offer their real estate clients a proprietary insurance program developed by Mainstay Insurance and written with A rated carriers on both admitted and nonadmitted paper. Mainstay’s carrier partners are ACE, Chartis, Liberty International Underwriters, Navigators, and Zurich.

The AGPOM Insurance Program is designed for the owners of apartment and condominium complexes and commercial lessors of office buildings, retail shopping centers, and warehouses. Available lines of coverage are general liability, property, crime, directors and officers/employment practices liability, and umbrella. Prior membership in AGPOM is not required; membership is offered in conjunction with the quotation. Although participation in green initiatives is voluntary, it does result in greater premium credits.

Mainstay also offers a real estate umbrella program for the owners of commercial and habitational buildings such as apartments, condominiums, retail centers, office buildings, and warehouse properties. Available limits range from $5 million to $100 million.

Agents on board

The concept and practice of going green increasingly are being embraced by independent agencies and brokerages around the country, Rowland asserts. Many agency owners already are committed to green initiatives and have implemented them in their own offices. For these agencies, being environmentally conscientious is a core personal and corporate value—and it’s also an excellent way to build a base of like-minded clients, Rowland comments.

That’s definitely the path that’s being followed by AGPOM’s charter members, an impressive roster of leading agencies and brokerages. Current charter members are Andreini & Company, San Mateo, California; DLD Insurance Brokers, Inc., Irvine, California; HUB International, Bothell, Washington; Insurance Office of America, Longwood, Florida; InterWest Insurance Services, Inc., Sacramento, California; Leavitt Group, Woodland Hills, California; Parker, Smith & Feek, Inc. (the 2008 Rough Notes Agency of the Year), Bellevue, Washington; Patriot Risk & Insurance Services, Irvine, California; and Wells Fargo Insurance Services, Inc., Seattle.

“We're currently in discussions with new charter members and are looking for more in under-represented parts of the country,” Rowland says.

Each of the member agencies has developed a volume of profitable business with property owners who are committed to green building and energy use practices. These AGPOM charter members, Rowland points out, don’t just “talk the talk” when it comes to being environmentally responsible, they also enthusiastically “walk the walk.”

A recent success story at Parker, Smith & Feek, Rowland says, proves the point. “Working with AGPOM, the agency created an insurance proposal that was accepted by real estate investment firm Metzler North America and real estate developer Gerding Edlen Development, Inc., which formed a joint venture to build a LEED-certified apartment development in Portland, Oregon,” Rowland explains. “Metzler North America and Gerding Edlen are two of the leading real estate investment and development firms in the Northwest, and both are strongly committed to the green movement. They looked favorably on our new insurance concept because it dovetails perfectly with their philosophy and practice.”

For the property owners and retail agencies that are joining forces through AGPOM to leverage their participation in environmentally sustainable practices, it’s proving both gratifying and profitable to turn green into gold.

For more information:
Mainstay Insurance Group, Inc.
Web site: www.mainstayins.com

Association of Green Property Owners and Managers (AGPOM)
Web site: www.agpom.org