Insurance Business America recently sat down with expert Stacy Brown of Freberg Environmental Insurance, who speaks about some of the biggest misconceptions employers have about their need for environmental protection insurance in this second installment of a four-part series.
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. Is there a recent high-profile event that underlines the need for contractors’ liability insurance?
Stacy Brown, President & Managing Partner, Freberg Environmental Insurance
Stacy Brown: There have been circumstances with hurricanes recently that have caused mold events in residential areas. The contractors that go in to remediate that mold need to have contractors’ pollution liability coverage in place in the event that they don't perform their work appropriately or perhaps in the course of their work they cause a pollution condition. So that would be a very real and recent circumstance. There's been a lot of flooding in Colorado, hurricanes - Katrina, Irene things like that, those are certainly cases where Contractors’ Pollution Liability would be something that a contractor absolutely would have to have.
What is your advice for insurance professionals looking to increase their business in the environmental space?
I think insurance agents should take a very close look at their books of business and try to identify those customers where they are managing very large quantities of raw materials. If you have an agent and they go through their books of business and they try to identify those customers that manage materials that could be the pollutants if they are released in an uncontrolled manner that would be a great place to start. Clearly there are some very obvious examples of landfills, wastewater treatment plants, facilities like electroplaters that manage very large quantities of hazardous materials, those are pretty obvious. It's the hidden exposure that I think agents really need to take a good hard look at their books of business. They could always call someone in the environmental insurance industry and we could walk them through any type of account they have and try to help them determine whether or not their customer has an environmental exposure. That’s something that we do all the time.
What are the biggest misconceptions employers have about their need for environmental protection insurance?
I think a lot of business owners don't believe they have an exposure or they don't think they are going to have an accident and those are two very false notions to have. Environmental incidents can crop up in a number of different ways. You know there may be hotel owners that have mold issues because there's a leak behind a wall, a small drip that results in mold contamination. Those types of exposures typically go unseen until they are discovered and once they are discovered it can be very very costly to remediate those types of exposures.
Are there any misconceptions about the things that existing policies cover?
Yes, the Commercial General Liability policy in all circumstances, it’s excluded, pollution is excluded on those policies unless specifically endorsed. Most GL policies if they do provide pollution, in many cases provide it on a sudden and accidental basis, meaning that it's only going to provide cover in the event that a spill is discovered and reported to the carrier in a very short period of time. That's different than the coverage that we provide and most of the other environmental insurance specialists. They provide coverage for gradual pollution events, so there's not a time element trigger which would limit coverage in the event of a release and discovery sometime at much later date. Those types of incidents on a sudden accidental policy are not covered. So in my view any kind of facility that handles these types of materials should have a policy that provides gradual pollution coverage as well as sudden and accidental.