Environmental Market Trends & Prospects: Part I
Environmental insurance is not just a specialized product for companies with obvious exposures. Recent events including accidents, lawsuits and even severe weather have made environmental liability issues much more high-profile of late, leading many smaller companies to reconsider their exposures and seek appropriate coverage. Insurance Business America recently sat down with Stacy Brown, president and managing partner at Freberg Environmental Insurance in Denver, to discuss a variety of issues impacting the environmental insurance market, and learn about some of the opportunities available in this space for brokers. In this first installment of our four-part series, Brown talks specifically about how the market has evolved recently, what types of facilities and businesses are good candidates for coverage, and how increased awareness in nontraditional sectors is increasing demand for particular types of coverages.
Video transcript below:
Brian Anderson, Managing Editor, Insurance Business of America
Brian Anderson: The customary rap on environmental insurance is that it’s a specialised product only purchased by companies with an exposure so obvious that they're legally required to carry some sort of cover. A few years ago that might have been the case. Today however a combination of severe weather events, expensive lawsuits and highly publicised environmental risks are leading many smaller companies to consider their exposures and seek appropriate coverage. Insurance Business America recently visited the offices of Freberg Environmental Insurance in Denver to gain some insight on emerging trends as well as some opportunities for producers in this market. Freberg is a highly regarded specialist in developing, marketing and underwriting environmental insurance programs. We sat down with 20 year industry veteran, Stacy Brown, the President & Managing Partner of Freberg Environmental to get his take on the issues in this instalment of a four-part series.
How has the visibility of environmental risk and liability changed over the last five years?
Stacy Brown: As there have been some very high profile environmental incidents in the past five years, that has certainly raised the awareness of environmental insurance and how it can protect property owners, facility owners and business people from environmental risk.
What types of facilities are good candidates for environmental insurance coverage?
Stacy Brown: I think there's always been a traditional base of facilities that look for environmental insurance like landfills or wastewater treatment plants, facilities with very obvious environmental exposures. But I think in the past few years there's been a slight shift where there are other types of facilities that are now considering purchasing environmental insurance coverage. For example, we had a number of years ago an incident where there was a spill of molasses. You wouldn't think that molasses would be an environmental pollutant, but if it's spilled in an uncontrolled way and if it gets into a waterway, it can kill all the fish in that waterway. So that's a circumstance where a facility that's handling a very large quantity of a raw material, that's not really hazardous of itself, but when it's released in an uncontrolled way, it creates a pollution condition.
How has increased awareness in non-traditional sectors increased demand for particular coverages?
Stacy Brown: I think in two particular areas, one would be environmental impairment liability and that's coverage for fixed facility. So the molasses example that was a fixed facility and they don't have any type of contracting exposure, so we are providing coverage for a number of fixed facilities across the country. Then you have contractors and contractors certainly need environmental coverage as they have many circumstances where they could generate a pollution condition, from a small renovation contractor or remodeling contractor who has potential to disturb lead-based paint in a home or a commercial building to an HVAC contractor who might install some equipment that may cause mold or a plumber that may cause mold or legionalla in a building. Those are two examples of the types of contracting operations where they have the potential to cause pollution conditions. You also have earth moving contractors, when you move large quantities of dirt, if that dirt is not controlled during a rainstorm the sediment can cause pollution in waterways and that's another circumstance where perhaps having a contractor's pollution liability policy in place would protect that contractor from having a major cost of remediation.