The environment: it seems like it’s everywhere, doesn’t it? As environmental concerns continue to both multiply and intensify across society, so too do the number of companies facing environmental exposure and the exposures themselves. Brokers aiming to provide their clients with the kind of comprehensive insurance package that protects every aspect of their business need to bring themselves up-to-speed on the complex and critical world of environmental insurance.
Simply put, the main purpose of environmental insurance is to fill coverage gaps created by pollution exclusions in property and casualty policies. Those gaps, if in effect during a hazardous material spill or similar exposure event, can crush any business by making it responsible for paying costly clean-up or legal fees.
“Every insured carries a pollution exposure to a certain degree,” says Jay Virdi, Burns & Wilcox’s senior manager of specialty risks underwriting. “Firms who carry large amounts of pollution exposures include all types of contractors, oil and gas workers, waste facilities, recycling facilities, and environmental consultants, just to name a few.”
Virdi explains that while these sorts of companies face significant exposure from asbestos, mold, fungi, mildew, toxic chemicals and waste materials, many of them do not realize the severity of the risks they face.
“The primary reason insureds feel that they do not have an environmental exposure is that they think encountering a loss is unlikely. But once a loss does occur, it can be catastrophic,” he says. “It is not uncommon for environmental claims to be in the millions of dollars, especially in cases dealing with oil and gas.”
Brokers play an important role in ensuring their clients have a comprehensive environmental policy that suits their specific needs, but because the sector is a relatively unique one, Virdi feels brokers often have trouble spotting the environmental exposures that the insured’s business presents. It’s a situation that should encourage motivated brokers to fill the gaps in their knowledge of the space.
Simply put, it’s an ever-evolving type of risk that represents a good opportunity for brokers to bolster their books of business. In order to service the expanding marketplace, however, brokers must be able to make thorough assessments and provide comprehensive solutions to ensure their clients are properly protected from unforeseen losses.
Most brokers may only see a handful of environmental submissions each year, but those who take the time to fully understand this unique and complex space will reap the rewards and stand out from the crowd.
