By Samantha Wright
With 40 or so carriers vying to cover pollution exposures in the US and a robust market capacity of over $600 million, the environmental insurance sector is a surprisingly stable and competitive marketplace marked by both overcapacity and growing demand, where agents and carriers alike have to fight to hold onto their best clients.
Environmental insurance got its start covering superfund-sized site pollution risks and asbestos abatement liability and containment in the 1970s. It has evolved since then to become less of a specialty coverage and more of a necessary purchase for day-to-day operational risks for all manner of contractors and consultants – both environmental and non-environmental – running the gamut from window installers to hazardous waste cleanup contractors.
The environmental contractors and consultants industry segment is where many carriers and wholesalers still find their meat and potatoes. But the real gravy in the sector over the past several years has shifted to Main Street businesses that are realizing they have environmental exposures – and that coverage for these exposures is within their reach.
“It really helps for agents to understand that pollution coverage on a monoline basis is affordable now,” said Bill Pritchard, President and CEO of Beacon Hill Associates, Inc., a national wholesale broker and industry expert specializing exclusively in environmental insurance solutions for commercial insureds.
“A lot of agents still are stuck in a mindset of 10 years ago that pollution coverage is expensive – and it currently is very easy and affordable to get quality coverage. Most agents don’t realize that this is something they can sell.”
Stacy Brown, President of Freberg Environmental, Inc., agrees.
“I think in particular, Main Street businesses that recognize they have an environmental exposure, even though it’s a relatively small environmental exposure, are creating a marketplace for environmental carriers,” he said.
Now, premiums have come down, limits have come down and environmental cover for those types of facilities has become much more affordable. And with so much competition in the marketplace, some carriers have recognized there is an underserved demand in this area.
“If coverage is affordable, they will absolutely buy the coverage,” Brown emphasized. “That’s where we see business growing. And frankly, there’s more of those Main Street businesses than all of the other facilities being covered right now – probably on a huge, huge scale.”
Alongside this relatively new focus on Main Street businesses, Brown is concurrently seeing numbers of carriers focusing more on core environmental businesses with clear environmental exposures. “In general, we are seeing exposures going up,” he said. “The marketplace appears to be quite healthy.”
To thrive in the environmental space and to meet the complex needs of their clients, brokers can add value by specializing and selling their expertise, said Garick Zillgitt, Senior Vice President Environmental at Rockhill Insurance Group of Kansas City.
“Environmental insurance is a mature specialty business,” he said. “We have all seen the horror stories related to coverage gaps and disputes related to pollution incidents when proper coverage was not in place. Given the well-functioning network of specialist carriers and brokers operating in the environmental space, solutions do exist to eliminate virtually all coverage gaps.”
