Fracking. Asbestos. Chinese drywall. Lead paint.
Fifty years ago, concerns attached to these environmental buzzwords were diminutive. Today, they have increased awareness of environmental liabilities and the profile of environmental insurance—and not just for facilities and firms with an obvious environmental exposure.
As president of 24-year environmental insurance veteran company Beacon Hill, Bill Pritchard has watched those changes fuel business.
“There has been a never ending litany of environmental exposures over the last 10 years,” says Pritchard. “The public is now so aware that they may be exposed to something potentially harmful that they are demanding coverage to protect themselves. That has really driven growth in the environmental marketplace, especially in coverage opportunities for non-environmental risks.”
Pritchard notes that the industry is seeing a “trickle-down” effect with regard to this demand, in which responsibility for environmental loss is being passed from business and property owners to contractors to subcontractors, all of which now represent great prospects for both retail agents and wholesale brokers.
Thankfully, the environmental insurance marketplace
is stepping up to the plate. When Beacon Hill first began operations, for example, just three to four companies were offering coverage. Now there are well over 40 companies vying for business, leaving producers with plenty of options, but not enough to create a concerning amount of downward pressure on pricing.
And of course, the growing presence of contractual requirements regarding environmental insurance and the body of lawsuits related to pollution events mean producers could face an E&O exposure if they don't wade into this gowing market.
While a producer can go through his or her book of business and find some form of environmental exposure with nearly every account, there is a certain amount of homework that needs to be done.
Because environmental insurance is far from being standardized, nearly every offering from an insurer is likely to be different. It is not enough to point out to a client that pollution liability is not covered under a commercial general liability form, for example—producers must understand the coverage they are working with.
“Insureds are becoming more educated and more aware in terms of what they’re buying,” Pritchard says. “The takeaway is that it’s really important for agents to understand what they’re buying. It can be incredibly complicated, with so many moving parts, and becoming familiar with various environmental forms is a real challenge.
“But I think they have to. Either partner with someone who does this all the time, or come up with a core group of companies to do business with that really understand these products. That’s how you find the quality form.”