It’s no secret that the more policies a producer can sell to one account, the better. With a full insurance program, a policyholder is much more likely to stick around and continue generating revenue.
is one addition to a commercial risk management portfolio that continues to gain steam. With an influx of carriers offering some form of environmental policy, insurance is readily available and more frequently purchased—and not just by the obvious candidates, judging from growth trends observed by key market players like Beacon Hill Associates.
“Our clientele is certainly more diverse,” says Beacon Hill President Bill Pritchard. “We’ve gone from working largely with people focused on environmental business operations to working with people not directly involved in environmental risk, but who realize they have an exposure.”
While nearly every company represents some degree of pollution liability, some industries are increasing their buying habits at a greater clip, therefore representing a greater opportunity for producers. As Pritchard notes, once a business sector starts to see losses or other environmental headlines in their industry, individual business owners begin to think more seriously about insurance protection.
“When you start hearing about others in your industry that have problems or an uncovered claim, that drives a lot of interest,” he says. “We get quite a few people who call because a friend of theirs had a claim recently.”
Here are three demographics especially ripe for environmental insurance coverage.
Following the economic downturn of the early 2000s, the nation’s contractor workforce
is in full recovery mode. The number of US construction jobs hit a three-year high last summer, and value of new private construction projects reached $659.4 billion, according to the Associated General Contractors of America.
And nearly every contractor on any one project has an environmental exposure, from a builder to a simple plumber or HVAC operator.
In recognition of that fact, more and more contracts specifically require contractors to carry some form of environmental insurance policy, such as a contractors pollution liability (CPL) policy, which covers most damages inflicted on a job site.
Limits can be as low as $250,000 or as high as $1 million depending on the project and the type of contractor.
Pritchard notes that projects such as apartment complexes and shopping centers are particularly popular right now, bringing in a lot of business for Beacon Hill and its retail agent partners. Fortunately, contractual requirements are fairly straightforward and producers do not need to be experts in legalese to ensure their clients are properly covered.
Property and real estate owners
Just as contractors are beginning to be required to carry environmental insurance, so are real estate and property owners. With the market still in stop-and-go recovery, banks and other lenders are requiring some forms of insurance upfront—including environmental.
“Commercial real estate transactions are definitely growing,” explains Pritchard. “We’re seeing far more property transfer where the buyer is required to hold environmental insurance.”
Lender environmental liability policies pay for any lost value stemming from an environmental issue discovered after a deal has gone through, as well as costs associated with cleanup. This prevents insureds from having to go through the time-consuming and expensive process of arranging an environmental assessment themselves.
Owners of fixed facilities
Another area Pritchard and Beacon Hill has seen grow is fixed facilities, which benefit greatly from environmental impairment liability (EIL) policies.
These policies cover incidents in which a material, when released in an uncontrolled way, does damage to the environment. Such an event is not covered under the commercial general liability policy—something many business owners may not realize.
And given the increasingly broad definition of what defines a pollutant, an EIL is a good thing to have.
“What it really seems to come down to is that the CGL definition of a pollutant is too much of anything in the wrong place,” says Pritchard. “A truck full of kitty litter, if it ended up in a stream, could end up polluting that stream.”
Starting the conversation
Wherever producers decide to prospect, Pritchard believes environmental insurance can be a game-changer when it comes to approaching and retaining clients.
“I think agents can really focus on this as an opportunity,” he says. “It’s a wedge issue—the kind of thing they can bring up to differentiate themselves from the competition. It makes you more professional, and everybody needs as much of that as they can get.”