This story is the continuation of Tuesday’s story “Upping your environmental game.” To read the first part, click here.
The broker’s role
The modern reality is that every client is likely to have some sort of environmental exposure, even if they’re not aware of it. “It isn’t just hazardous waste that is a problem, so you need a good environmental policy to make sure you’re covered properly,” Jones says. “A client may say they’ve never had a loss and therefore don’t need environmental coverage, but the reality is that absence of loss doesn’t mean absence of risk.”
Jones stresses the importance of educating clients and guiding them toward the right type of policy. Offering comprehensive options doesn’t just safeguard the client – it protects the broker, too. “Brokers have to present environmental insurance opportunities to avoid professional E&O against themselves,” Jones says. “It’s the broker’s responsibility to protect themselves by offering the right options, but a lot of the time, they don’t want to talk about environmental coverage because they feel they’re not an expert.”
Brokers with expertise in this area should consider each one of their clients and the possible situations that could lead to them becoming embroiled in an environmental or pollution event. Brokers unfamiliar with the environmental space can contact an environmental insurance specialist or speak to one of their carriers, who will walk them through the environmental policy. “Once you’ve spoken to [clients] about their exposures and the coverage and cost available, they’re going to be making an informed decision,” Jones says.
Bernay adds that, to understand a client’s position as thoroughly as possible, both brokers and underwriters need to get as coverage, cost of coverage and the coverage you can offer.”
Product knowledge
Bernay also advises agents to take the time to get fully informed about the products available – and he says underwriters can help brokers understand and differentiate the vast array of policies and tools on the market. “We look for brokers who not only have a good understanding of the risks, but also spend time developing their knowledge and getting to know the business they’re serving,” he says. “There’s a good opportunity for brokers to become specialized in this area. Don’t try to be all things to all people.”
Bill Pritchard, president and CEO of Beacon Hill Associates, says the proliferation of new markets entering the environmental space is creating a challenge for brokers. out?” he says. “All of these factors have a huge amount to do with the long-term value of the product being offered.”
In order to handle the increased opportunities in this space, agents should prioritize finding a fixed product they can offer to all clients. “You have to have a base product, but at the same time, that product has to be flexible enough so that your larger clients and clients with diverse appetites and exposures can still fit it into their model,” Bernay says. “The difficult part is making sure you get a product that can meet all of your clients’ needs, because the marketplace is competitive.”
Brokers have an integral role to play in analyzing their clients’ environmental risk – even if a client perceives it to be minimal. Brokers should consider all of the potential impacts and provide a strong product that covers a client for all eventualities.
