The State of the Environmental Insurance Market

National Underwriter recently interviewed our very own Bill Pritchard, President of Beacon Hill Associates, asking him to weigh in on changes in the market, pricing trends, and emerging risks. This article was printed in the August 1, 2011 issue of PropertyCasual360.com.

What new environmental products are out there today in the marketplace?

While there are few truly new products in the environmental marketplace, the biggest factor now is the wide availability of many products that were once innovative and hard to find. Combined commercial general liability, environmental-impairment liability and contractors’ pollution liability, for example, were once available from only one or two carriers but can now be found from many companies. Products pollution, either as part of the aforementioned or on a standalone basis, is now widely available. Of course, the real issue raised is not “are the coverages out there?” but rather “is the carrier offering quality products?”

What are the pricing trends in environmental insurance?

Pricing is beginning to stabilize from the more established carriers and, in some instances, is climbing slightly. Some risks that were written by environmental carriers in the past are now being either non-renewed or premiums are significantly climbing.

Carriers with the best forms and service structures are beginning to seek a premium for their products, and we are seeing a growing trend of agents who are understanding the coverage nuances and getting their clients to appreciate, and pay for, the difference.

What are the emerging risks?

From an exposure perspective, the growing awareness and desire to protect the environment within the general public continues to drive significant growth. More and more end consumers are demanding their service providers be able to prove they can respond and be responsible for their work. The biggest risk is to agents who have inadequately protected their clients.

For agents working to cover these exposures, we see the largest risks in the market coming from competing products that offer substandard coverage. Many agents are swayed by the lower costs and often end up with policies that do not sufficiently address the insureds’ exposures or significantly reduce what they once had. Today’s market really demands that agents take their time and fully understand the products they are working with.