has risen both in profile and take-up rates significantly over the past 10 years, leading many producers to begin pitching this product to an increasingly diverse clientele. And while many companies are voluntarily choosing to transfer their environmental liabilities, a significant number are being required to thanks to new specifications in building and maintenance contracts as well as lending agreements.
For producers, that means selling environmental insurance is no longer a matter of choice in many cases. Producers who work with contractors or those involved in real estate transactions will be faced increasingly with contractual requirements to purchase environmental insurance—and they must know how to best handle this product.
1. Coverage is available and affordable
For those not bound by contract, many groups who could benefit from environmental insurance are kept from exploring the product—first, by not understanding their exposure and second, by a preconceived notion about the expense.
Bill Pritchard, president of environmentally focused Beacon Hill Associates, says that while producers may understand the pollution exclusion in the commercial general liability (CGL) policy, a business owner may not.
“I think most insureds think they have coverage and don’t realize they don’t until someone has a conversation with them about it,” says Pritchard. “Agents have to do it.”
As for expense?
“The days of environmental insurance being hard to find and expensive are long gone,” he says.
2. Forms are not standardized
With such a dynamic and changing risk, environmental insurance is not yet offered in standardized forms. As such, offerings from different carriers are likely to be incredibly diverse and require detailed reading.
Understanding these policies is Pritchard’s number one piece of advice for producers new to environmental insurance.
“It’s really important for agents to understand what they’re buying,” he says. “It’s an incredibly complicated job with so many moving parts, but understanding these products is how you find the quality form.”
It’s particularly important when working with contractors. Though Pritchard notes that contracts are still fairly straightforward in their requirements, some ask for forms that have been discontinued by ISO.
3. Underwriters are key
In learning and interpreting environmental insurance forms, producers are not alone. Underwriters at a wholesaler or carrier can help explain some of these nuances to producers—provided producers do their job in supplying information in their submissions.
“The biggest challenge we face is lack of information coming in from agents and trying to get quotes off nothing,” says Pritchard. “The most successful agents put together a really good package on a client—the application, their resumes, any relevant websites—and explain that to the underwriter.