As environmental insurance market sprouts, education on products still lacking

As environmental insurance market sprouts, education on products still lacking | Insurance Business America

As environmental insurance market sprouts, education on products still lacking

Elizabeth Pullen, producer/broker at Allied American Underwriters (AAU), has been in the industry for 31 years. She ended up in the environmental specialty because she found herself leaning towards more complex risks and exposures.

“I have always gravitated towards more in depth policy language and understanding the contract itself,” she said. She went from commercial lines into specialty lines, and spent eight years working on professional liability for medical accountants and lawyers before getting into architects and engineers, which led her to environmental insurance.

With decades of experience, she shakes her head at the education that many insurance professionals are missing when they dip their toes in the growing environmental market. In this Q&A, she shares insight on her specialty, pollution exclusions, and advice to brokers hoping to get into the growing environmental insurance business.

Was there a steep learning curve coming into environmental insurance?
I progressed with environmental as environmental progressed. So when I first got into it, there weren’t a lot of markets that were offering it and there weren’t too many people that specialized in it. I grew as the environmental marketplace grew.
What does that environmental marketplace look like today versus when you started out in the specialty?
It is much, much bigger. It’s sort of a situation where everybody wants a piece of the pie, everybody wants an opportunity to make money on environmental. Environmental is up-and-coming because every time we turn around, there’s another source of pollutant.

Pollution under a policy is defined basically as an irritant or a contaminant, so with that definition, almost anything can be an irritant or a contaminant, and general liability policies that are in the market exclude coverage for pollution. They have what’s called a total and absolute pollution exclusion, so if you have a general liability policy and it has a total and absolute pollution exclusion, you have no coverage for any bodily injury caused by an irritant or a contaminant. It leaves a tremendous gap in a general liability policy, for both a products perspective, and from a bodily injury and property damage perspective.

What kinds of exposures do you work on?
The types of exposures that I work on range from somebody with a fuel distributor with a tank farm to asbestos abatement contractors, asbestos and lead abatement, mold abatement, demolition contractors, and then all sorts of manufacturers, distributors, site pollution for anything from hotels to condos, apartments, country clubs, and resorts.
Besides pollution exclusions, what are some of the major issues affecting your line of business?
It is that there is such a growing accessibility to the products and not a growing education on how those products work, so one of my major jobs that I do is fixing other people’s errors because we have a lot of brokers and agents alike in the marketplace that think that because they have access to these products, that they therefore can place it by going to a carrier, sending in an application and saying, ‘I need contractors’ pollution liability.’

The carrier always gives you just what they want to give you, so they send back a quote for contractors’ pollution liability, and they think, ‘great, I have my quote,’ and [pass it onto the client]. The problem is the environmental forms are not standardized, like a GL form would be. Every carrier’s products vary because they’re carrier-specific so what you buy from one carrier may be completely different than the same product that you buy from another carrier. If you buy CPL from one, it may include XYZ and if you buy it from somebody else, it may exclude that XYZ. That’s true across the board.

So, the biggest problem is people think because the accessibility is there and it’s growing and everybody wants to participate, these carriers give more and more people access to it, but they don’t have the expertise to be writing it correctly.

What are your recommendations to address the education gap?
What I recommend is that if they’re going to specialize in it, that they get the education that it takes to do it properly, but I recommend that for agents who aren’t going to have a specialty in it, that they reach out to a specialty broker who does.


Related stories:
Wortham: The benefits of a client service-based philosophy
The 'million-dollar question': can the insurance sector take another year of catastrophes?