Bucking convention: a possible platform for an alternative energy underwriting strategy.

As a marine biologist, Mark Brown, vice president of Markel Corp.'s environmental division, often wondered if there was money to be made on marsh grass. Now as head of a large wholesaler's environmental operation, he does indeed make money on the processing of marsh grass. And algae. And used cooking oil. But not conventional energy exploration and production.

No, drilling for oil and gas is not exotic enough for Brown and Markel. He said that with a smile, but there is truth to the irony: Brown makes money providing blended, prepackaged, preapproved coverage for the fringe energy, biotech, and environmental entrepreneurs that no one else will write. "When we started this group nine years ago," said Brown, "we were the only segmented program 100 percent catering to wholesale insurance. Also, we were the only ones using an ISO-based language that the brokers could understand, versus a scientific language."

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The big innovation from Brown was the blended coverage to fit specialty energy, chemical and environmental risks. "We can give the insureds what they need straight out of the block--general liability, products pollution, contractor, product liability--everything blended without having to go back to get coverage approved," said Brown.

The money is in the fringes of alternative energy and reprocessing, he said. "Some guy is collecting waste oil and blending it to a BTU value and using it to fire a cement kiln. That is not unusual for us, but not something that the mainstream is going to be able to cover out of the box. All of a sudden there is a geothermal boom now. And people using aquaculture to grow algae to press for oil." For example, the Salton Sea, in south central California, has potential for algae farming. A recreational desert lake turned to a toxic stew, the Salton Sea has resisted rehabilitation for decades.

That is still experimental, but other alternative energy businesses are well established. "We wrote our first biodiesel risk in 2003. In those days it was some guy with a reactor in his garage. He was collecting maybe 100,000 gallons in about a $200,000-a-year business. For that we could collect a $25,000-a-year premium. Now with the price of oil that is close to a million-dollar operation and the big guys are happy to write it for a $5,000 premium. The correct price should be somewhere in between."

No matter. There are always more niche operations that need coverage. "The innovation at Markel is that they go into the risk and try to find a way to write it rather than a way to qualify or differentiate it," said Davis D. Moore, president of Worldwide Securities in Los Angeles. "We do business with almost all of their points of entry," he added. "They are one of our largest sources of production." Brown's operation "has a very broad underwriting appetite," said Moore. "They have great form capabilities and probably the greatest flexibility in the market. Both of those are very important to us." The payoff, said Moore, is that Brown's innovative approach to writing converge has brought in more business.