Bill Pritchard, founder and CEO of environmental specialist Beacon Hill Associates, said that environmental insurance
was something of an unknown quantity in decades past, but that the market for environmental coverage has stabilized and become very competitive as insurers have realized that it is not the scary proposition it was once thought to be.
“In the early days, environmental insurance was kind of scary to a lot of companies. I think they have come to realize that true environmental firms that do environmental work have very well trained, well-paid people, and very little turnover,” Pritchard said. “Environmental companies ended up being better risks than people thought they would be, and they are good accounts.”
“The quality of the risk combined with the growth in capacity in the insurance industry just looking for somewhere to go has pushed a lot of capacity into the environmental space and created a lot of underwriters who want to write accounts. A combination of a better understanding of the risk, and more competition have driven premiums down. I don’t really envision environmental insurance ever getting less expensive than it is right now. The market makes sense today. The return on risk is reasonable, claims are happening, but companies are finding that the bottom dropping out of the market just is not going to happen,” Pritchard said.
“I think environmental insurance really empowers businesses to be responsible for the environment. We’re selling coverage to people that will allow them to do the right thing. If they don’t have this coverage, they may be unable to deal with the repercussions. If it is a bad enough problem, they may go bankrupt.”
He said that going through the application process alone is sometimes enough to get people focused on how they can do the right thing environmentally. “They think about what they are doing, they assess their exposure and apply costs to that.”
Pritchard said selling environmental coverage is easier today than it has been in the past. “People today know they have exposure, and a lot of them buy insurance the first time they look at it. They understand the need,” he said.
“Based on what I have seen over last few years, environmental insurance is more of a hot topic,” agreed Samantha Longo, a broker specializing in environmental coverage at wholesale brokerage Worldwide Facilities. “It is easier to get, and more affordable The more claims that people hear about, the more they realize they do have environmental exposure and should be covered for it. It is a growing market, and it really applies to so many types of industries,” she said.
“We give agents the tools they need to explain it to a client,” Pritchard said. “‘Look I know you are a hotel and you don’t think you have environmental exposure, but here is why you do,’ and whether they buy or not they at least start thinking about mitigating their exposure.
“I think being a retail agent is so tough. You are part educator, part confidante, part salesman. There are lots of parts to being a good insurance producer. It’s a tough business,” he said.