Selling any insurance can be hard, but selling coverage for an exposure that someone doesn’t think they have can be especially difficult. So it is, said Beacon Hill Associates founder and CEO Bill Pritchard that agents selling environmental coverage often have their work cut out for them.
Agents, he said, need to work hard to educate themselves so that they can educate their clients.
“One of the hardest jobs in the insurance business is to be a retail agent. You have to explain just a huge ranges of exposures and coverages and issues to clients who, no matter how dedicated they are, are going to lose interest at some point in that conversation,” Pritchard said. “It’s a tough thing. Pollution has always been part of that conversation, but in my early days in the 90s, pollution was one of those things that was in the letter that said ‘yes we talked about pollution but I don’t want to pursue coverage.’”
Beacon Hill, a wholesale insurance broker and program administrator, has specialized in environmental insurance since its founding in 1990.
While some agencies still report that clients are not interested in environmental coverage,that may be a reflection of the agent’s knowledge as much as of the client’s interest. Pritchard said that in his recent experience, environmental coverage is among the top 5-10 things insureds want to talk about. Of course, environmental coverage is among Beacon Hill’s specialties.
Pritchard said virtually all businesses have some environmental exposure. “The big thing from an agent’s perspective is that pollution exclusions in a GL policy do not just relate to hazardous materials. Exclusions generally contain a very broad statement of what can be considered a pollutant and a lot of agents and insureds believe that they only have pollution exposure if they handle toxic substances, something with a warning placard on it, and that is just not true.
“Any commercial insurance buyer has some risk. Now whether that risk is high enough that they want to transfer it is another story and that is why the agent has to have that conversation to determine risk tolerance and how worried about it they are,” Pritchard advises.
“I think the reality is that all businesses have exposure. It is a question of how you want to manage that risk. If you own a commercial office building that you lease to tenants, indoor air quality claims that lead to business interruption for the tenant are a pollution-related problem, contamination and fumes that get in the air handling system and cause people to have headaches and go home can be a risk. I’ve seen all sorts of claims ranging around those exposures, not to mention contamination in the ground from your building or from a neighboring building passing under your building and out the other side. If you have pass through contamination, even though you didn’t cause it, you become part of addressing that pollution problem,” he said.
