As a growing number of lenders in the CMBS market use environmental insurance as a substitute for Phase I Environmental Site Assessments (due diligence) - a procedure that has been traditionally required by the rating agencies as part of the underwriting process - insurers are starting to offer new products that would inevitably push the increased use of environmental insurance for CMBS collateral, experts say.

A prime example of this is the development of a hybrid product that would combine environmental insurance with due diligence, thus allowing lenders to enjoy the best of both worlds and decrease costs.

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