Having options is a great way to demonstrate your expertise and commitment to your clients. Clearly, this is a good approach with new business opportunities, but marketing a renewal and encouraging your client to switch carriers on an existing account need to be carefully considered. In today’s market, many accounts are marketed to try to achieve a better price. While that is certainly a worthwhile goal, changing carriers on a renewal account may cause real problems.

Here are a few issues to consider:

• The agent needs to be fully aware of the specific coverage differences between the expiring policy and the new policy. Although both forms may be appropriate for the insured’s needs, there may be discrepancies between them that could potentially create gaps in coverage.
• There will always be differences in the carrier offering the coverage. Where one may have a solid A.M. Best rating and a history of handling claims effectively, another may have a lower rating and not have a successful claim track record. Service and stability add a great deal of value.
• If the agent is aware that there are enhancements on the expiring policy that may not seem too significant; yet they are not offered on the newer form—and a claim is filed—the agency may be held liable and have an E&O issue.
• Aggressively marketing a risk every year gives the insured a reputation in the marketplace. Many accounts do not get reviewed by companies because they see them every year and never write them. Unfortunately, there may be a time where the insured really needs to switch carriers and the carrier declines to quote.

Here are some steps that brokers will want to take if you are considering marketing an account at renewal:

1 – Review the account 90 days before expiration.

2 – Discuss the coverage options that may exist in the market to assess if there is a better product being offered.

3 – Assuming the insured is happy with the coverage and carrier on the risk, it is important to determine the target price or rate goals for the renewal.

4 – Confirm with the insured that if that premium or rate goal can be achieved with the incumbent carrier, they will renew.

5 – If the carrier cannot accommodate the requests, there is still time to go to other carriers and try to achieve the insured’s coverage and cost goals elsewhere.

This allows you to give the insured what they are looking for without running the risk of reducing their coverage or any of the other pitfalls of moving coverage to a different carrier. Even if alternative proposals from other carriers are requested, agents are still encouraged to send renewal information to the incumbent carrier. The insured should not move the program elsewhere without comparing any new proposals to the expiring policy.

For more information, please call us at 1-800-596-2156 or email us.

An ERP (a.k.a. “tail”) is an endorsement subject to an additional premium, purchased to extend the window for reporting a claim. This should not be mistaken as an extension of the coverage period; the occurrence must have taken place after the policy’s stated retroactive date and before the end of the policy period. Dependent on the carrier, ERPs are generally offered for a maximum period of three to five years with shorter windows available.

The prime reason for seeking this option from the carrier for your insured is to give them more protection. What if a claim is made against the insured for an incident that occurred on the last day that the policy was in effect, but is not reported until three months later? Without an ERP, once a claims-made policy or policy with claims-made coverage parts expires, the window of protection is effectively closed for the insured. Wouldn’t you want this option from your agency if it were your coverage?

For more information, contact your Beacon Hill Associates representative at 1-800-596-2156.

Have you ever read an article pertaining to environmental issues, or perhaps looked through an environmental report and noticed the same acronyms appearing over and over again? Or you are reviewing questions from your underwriter which include technical jargon you don’t encounter on a daily basis? Is your insured looking to you for help because they now need to comply with environmental regulations?  Below are essential phrases and abbreviations to help better explain the colorful world of environmental topics:

ACRONYMS:

RCRA – Resource Conservation and Recovery Act
CERCLA (aka Superfund) – Comprehensive Environmental Response, Compensation and Liability Act
TSD – Treatment, Storage, and Disposal facilities
SWMU – Solid Waste Management Units
TCLP – Toxicity Characteristics Leaching Procedure
VOC – Volatile Organic Compound
PCBs – Polychlorinated Biphenyls
PRP – Potentially Responsible Party
POTW – Publicly Owned Treatment Works
BOD – Biochemical Oxygen Demand
NPDES – National Pollution Discharge Elimination System
HSWA – Hazardous and Solid Waste Amendments
EPA – Environmental Protection Agency
NODs – Non Owned Disposal sites
WWTP – Wastewater Treatment Plant
NPL – National Priorities List
SARA – Superfund Amendments and Reauthorization Act
CWA – Clean Water Act
TSCA – Toxic Substances Control Act
MCLs – Maximum Contaminant Levels

DEFINITIONS:

Hazardous Waste – Wastes (solids, sludges, liquids, and containerized gases) other than radioactive (and infectious) wastes which, by reason of their chemical activity or toxic, explosive, corrosive, or other characteristics, cause danger or likely will cause danger to health or the environment, whether alone or when coming into contact with other waste.

Large Quantity Generators – facilities which generate over 1000 kg of waste per month.

Small Quantity Generators – facilities which generate less than 1000 kg of waste per month.

Solid Waste – garbage, refuse, sludge from waste treatment plant, water supply treatment plant, or air pollution control facility and other discarded material, including solid, liquid, semi-solid, or contained gaseous material resulting from industrial, commercial, mining, and agricultural operations and from community activities.

Potentially Responsible Parties – present and/or past owners, operators, generators, and transporters of contaminated sites.

Treatment facility – a facility which changes the physical or chemical characteristics of a waste, or degrades or destroys waste constituents, using any of a wide variety of physical, chemical, thermal, or biological methods.

Environmental monitoring – collecting samples of the environmental media and testing for the presence of hazardous substances that may have been released into the atmosphere.

Regulatory compliance – environmental regulations enforced by government entities to manage waste.

Leachate – combination of the direct precipitation infiltration and any liquids squeezed out as a result of consolidation of landfill waste materials.

Landfill – permanent placement of waste on or below land surface.

Fracking – a slang term for hydraulic fracturing. Fracking refers to the procedure of creating fractures in rocks and rock formations by injecting fluid into cracks to force them further open.
Carbon footprint – the total set of greenhouse gas emissions caused by an organization, event, product, or person.
Wetland mitigation – the replacement of wetland functions through the creation or restoration of wetlands.

As environmental coverages become more widely understood and companies are more aware of their environmental exposures, agents will receive more requests for environmental insurance. Having a higher comfort level with industry terms such as the ones included in our glossary above will allow you to more helpfully advise your current clients, and to also take advantage of potential opportunities to work with new classes of business.

A typical Commercial General Liability Policy will exclude contractual liability which “indemnifies a railroad for bodily injury or property damage arising out of construction or demolition operations within 50 feet of any railroad property and which affects  any railroad bridge or trestle, tracks, roadbeds, tunnel, underpass  or crossing”. You may notice that the work doesn’t have to be performed within 50 feet of the tracks.  If your client is performing these contracting operations within 50 feet of any railroad property, this is a significant exclusion and should be addressed via endorsement to the CGL policy.

Most carriers using an ISO GL form will offer a CG 24 17 Contractual Liability-Railroads endorsement to “buy back” some of this excluded coverage. It replaces the definition of “Insured Contract” and removes the above language from the exclusion. Carriers prefer to limit the endorsement to a scheduled railroad and a designated job site, as this endorsement is usually driven by a specific contract.  However, many will consider using blanket verbiage. The cost for this coverage will vary based on the scope of services, limits required, and size of the project, but because this limit is typically a shared limit within the CGL liability limit, there can be some flexibility in pricing.

Agents sometimes confuse the addition of the CG 24 17 endorsement to the Insured’s policy with a separate Railroad Protective Liability Policy (RPL). ISO offers “Railroad Protective Liability Coverage Form” (CG 00 35) and many carriers use this form as well. The RPL policy is provided to insure the railroad, not the contractor performing the work. The railroad may require a policy in their name for any work done by a specific contractor at a specific jobsite on or near the railroad property.  The contractor will be listed on the declarations page, however, no coverage exists within this policy for the contractor. The contractor is not the insured under a RPL policy.  The “catch” is that the contractor is the one responsible for purchasing the RPL policy on behalf of the railroad. Contractors may build this premium into their initial bids to offset the extra expense. The CG 24 17 endorsement and CG 00 35 form are compatible, but are not interchangeable.

Railroad Protective Liability polices are usually required for a contract prior to the commencement of work. The railroad may have specific limits they need, typically ranging up to $2,000,000 / $6,000,000. Because this is a separate liability policy, pricing may be subject to certain minimum premiums and the carrier may require that they also write the contractor’s primary CGL policy as a condition of binding RPL.

To obtain a quotation for either of the above railroad coverages, the carrier will typically need the following information:

• Name and address of the railroad
• Description of services performed
• Limit of liability required
• Duration of the project
• Location where work will be performed

As an agent, you may have a site remediation contracting account hired to clean up contaminated soil from an industrial facility, for example.   Many of these industrial sites are either adjacent to a rail yard or have railroad tracks running through the property.  Without the CG 24 17 endorsement, your client may not have any coverage for their excavation operations.

It is important for agents to distinguish between the Contractual Liability-Railroads endorsement and the Railroad Protective Liability policy. If a contractor is required to provide RPL, the agent should be offering the CG 24 17 endorsement to the contractors CGL policy.

2010 saw a rapid expansion of the environmental/pollution insurance marketplace in the face of daunting conditions. Why this growth has occurred, and what it means to an agency, are important to understand. The performance of this niche clearly illustrates the efforts being made to find success in our evolving market, and agents that can correctly tap into it will see significant return on their investment.

In 1990, four companies offered dedicated environmental insurance products. In 2000 there were closer to 10. At the end of 2010, there were at least 40 companies with environmental practices. One thousand percent growth over 20 years is significant, but even more significant is the growth in the last 3 years, from 20 to 40. Companies including XL (formerly ECS), Chartis (formerly AIG), Zurich, Markel, Liberty, Chubb and others have been involved almost from the beginning. In the face of the most difficult market most can remember, why has environmental been such a draw for carriers? And what does this explosive growth mean for the insurance agent?
At the root of the growth in environmental carriers is the underlying shift in how insurance works. Carriers have long underwritten to very small profit goals, recognizing investment income as the true driver of their profitability for their investors. Equity market returns of 10 percent or greater were the norm for many years. Carriers generated premium, reserved conservatively, putting that money into IBNR, and saw the investment income profits role in. This model served our industry very well for many years and through many market cycles.

Unfortunately, this underlying dynamic has changed. The investment market is no longer able to return such generous results to its investors, and this is in turn is forcing companies to find their profits elsewhere. The only viable solution is to try to underwrite accounts more profitably than before.

While this seems like a simple task, it is anything but. Due to the difficult economic environment over the last 3 years, the insurance industry is struggling to write as much premium as in the past, not to mention at a greater profit. As whole sections of the economy lose value, the insurers that cover them generate less in premium. With current unemployment figures hovering at just under 10 percent, the industry that rates based on payroll has taken a real hit. Adding to this the anemic overall growth of the economy, and you end up with carriers fighting for more slices of a shrunken pie.

Add to this the reduction of loss reserves at many companies. Carriers traditionally bring reserves down as prior year results have allowed, dropping those dollars right to their bottom lines. Unfortunately, given the lack of investment returns, they are no longer filling that reserve pool back up as aggressively as they once did. The money that eventually came out and bolstered the bottom line is rapidly going away. If a company can maintain strong underwriting profitability, this is not a huge problem. If, however, carriers have to fight for business and write risks for less than they want to, this can quickly become a significant long term issue.

The final piece of the puzzle is the dramatic influx of capital into the industry as a whole. While the insurance industry has been struggling, the promise of a decent enough return excites investors into the marketplace, especially compared with the return the equity markets have yielded. Over the last 5 years there has been a steady influx of money into the insurance industry, all of it seeking a home and a respectable ROI.

So how does this all lead to an increase in environmental programs over the last several years? The answer is simple. When environmental business was first written in the late ‘70s and early ‘80s, carriers had no idea how to price it. Coming off of horrific asbestos-related claims, carriers were very cautious in how they priced these products. Over the intervening 30 years, it has been shown that environmental exposures are not significantly more challenging than many other casualty lines. While there are of course exceptions in certain areas, the general consensus is that environmental risks are more profitable than many other mature market segments.

This is where things get interesting. While this may be true, it is by no means universally true. Over the last 10 years carriers have blended coverages to sell under the heading “environmental.” Many of these combine CGL and products with site or contractors pollution. While the environmental component of the package may in fact be profitable, there is ample evidence that casualty business is, and will always be, casualty business. If you write tough products, you are going to have some real claims. If you write a combined CGL and contractors pollution policy for a tank installation contractor, you are more likely to see claims from people falling into holes than you are from pollution. So while “environmental” insurance has proven itself to be very profitable over the last 30 years, it is mutating into something different where the genes of its more standard components may well be dominating the results.

Another challenge is the people. Environmental insurance has had a very short and squat pyramid; broad base but not much room at the top. Over the last 10 years many talented men and women have risen in the ranks of environmental insurers. Many of them have been looking for the next step into senior management. Heading an environmental unit is often the crown jewel of someone’s career. Many of these people are looking hard for the opportunity to jump their careers to the next level, and are aggressively reaching out to carriers without an environmental unit to try to create the job they seek. All of the above pieces have lined up over the last several years. We have an influx of capital, we have carriers looking for ways to write more business more profitably, we have a market segment with a history of profitability and we have people willing to lead these new divisions. Given all of the above, it’s a wonder we don’t have even more markets focusing on environmental accounts.

What does this mean for an agent? Many may think choice is a good thing, and in many respects it is. Environmental insurance is a class of business where individual underwriter appetite often dictates what a carrier will write, or at least will try to write aggressively. Having only one or two relationships leaves an agent at the mercy of one or two individuals. If, on the other hand, an agent can go to 40 different markets, he or she should never have to worry about any single underwriter blocking the path to success.

While on the surface this makes some sense, it is a very dangerous path for an agent to follow for a few reasons. The characteristics of a good carrier relationship differ for many agencies, but in general they include carrier stability and commitment to the line, underwriter knowledge and responsiveness, solid claims handling system and track record and proven service capabilities. All of these components add up to not only success writing an account, but long-term success in servicing and maintaining the business. Compounding growth only comes through happy insureds renewing year after year. If claims are not being paid and endorsements not delivered, it makes every renewal a fight instead of an affirmation.

Determine your Partners
The environmental marketplace has grown quickly, and the development of many programs has been somewhat mixed. There are surface indications that agents can review to determine if a market will be a good partner for them.

The first is the commitment carriers have made to environmental insurance. Are they in this for the long haul or are they simply trying to write some quick business? A gauge of this commitment is their staffing situations. How many employees have they hired? How many offices or locations do they have? Are they making enough of a commitment for an agent to know that they can adequately service the business they are writing, and that they are in it for the long run? We have seen markets enter this arena recently with two or three employees, and we have seen others enter with 15. Clearly one is making a bigger commitment than the other.

A similar issue is the claims handing staff. Has it hired at least a few key claims people to handle environmental claims? Environmental claims are not the same as regular casualty claims, and people with experience in this area are critical for long term success of a program.

The final key component is management and underwriting staffing. Is the person the insurer hired to put the program together an experienced environmental and insurance professional? A senior underwriter making the move to management can be fraught with problems, as the management role is so complex. Does the person coming on board have the background to be successful? Also, who has been hired as underwriters? Do they have experience and credibility in the marketplace? Again, seasoned experienced underwriters and a structure to enable them to succeed are very important.

Agents need to partner with companies that are committed to the line of business. A company that hopes to be doing this in 10 years is far more likely to responsibly deal with the issues that will inevitably come up than one who is in it for short term premium volume. While the above do not guarantee commitment, they certainly indicate it.

Once an agent is satisfied with this, the next important component is reviewing and understanding the coverage being offered. No two environmental policies are the same, and there is huge diversity in the type of coverage being offered. Knowing what you’re offering the client is crucial, certainly as crucial as knowing the carrier you are offering it from.

Given the above, an agent may find that the best way to access environmental carriers is to go through a specialty broker. In the current marketplace these brokers typically pay the same commissions that direct carriers would, and give the added advantage of having done a lot of the above leg work for the agent. The same criteria need to be utilized to make this selection as was used for the carrier review. Longevity, commitment, expertise, reputation are all import and easily judged items. Spending a few moments researching the web and talking to other agents and carriers can bring you excellent choices for partners.

The environmental market is still growing fast. One of the positive offshoots of so much competition is a huge increase in marketing. All of these carriers, and the many brokers focusing on the line of business, are marketing the coverage. This is leading to an increased awareness at all levels. More job specs are requiring pollution coverage, as are landlords, lenders and attorneys. This increase in exposure is a definite plus for agents seeking new coverages to offer their clients.

Last year’s BP oil spill has been yet another driver of increased interest. Many of the business impacted by the spill, from coastal property owners to people making their livings along the Gulf Coast, could have been protected by the right environmental coverage. Many businesses have learned from this situation, and other lesser-known ones in their own back yards, and are reaching out to their agents to discuss what coverage is available to them. Most insureds can talk about a similar business or an associate they know that has had an environmental issue come up. This increases the population buying these products from hundreds in the early days to hundreds of thousands today.

The evolving insurance industry has challenged many but has also created opportunities unlike any seen before. Agents wield a great deal of power in this market, being the gate keepers to their clients. With so many agents and carriers scrambling to find business, and in some cases willing to do almost anything for it, the potential fallout is huge. Inadequate coverage, carriers gone after a year or two, and similar problems will force many agencies and carriers to the sidelines. Those that take time to consider the choices they are making, and the long term ramifications of them, will rise above their competition. This is already beginning to happen, as some are seeing significant growth in new business and strong renewal retention while others are falling fast. As the economy continues to improve, and with it the equity markets, the frenzy of the last few years will fade, and competence and professionalism will prevail. A solid environmental strategy is only one component, albeit an important one, of the thoughtful agencies’ strategy to continue to succeed in our new marketplace.

We are now finding that the requirements for this split have gone down significantly, and our markets are becoming more flexible in the types of accounts they will consider. Many carriers have seen the benefit of writing both the GL and Pollution for these risks and are therefore redefining these underwriting guidelines. Account types include:

• Bioremediation contractors
• Industrial cleaners
• Demolition contractors
• Crime scene cleanup/meth lab cleanup contractors
• Bio-solid applicators
• Service station contractors
• Pipeline contractors
• Fire & water restoration contractors
• Many others – please talk with a Beacon Hill representative to discuss a specific account.

Check out some of our recent GL/CPL environmental contractor success stories!

For more information, call us at 1-800-596-2156.

The dramatic economic events of the last several years have had a profound impact on the insurance industry. As a naturally cyclical business, insurance has suffered the double whammy of a softening market cycle coming during an economic meltdown never before seen in our lifetimes. Such a historic set of circumstances will leave an indelible mark on our industry. But while there are many challenges yet to be overcome, there is certainly reason for cautious optimism; much like the American spirit, the insurance industry is infinitely resilient and creative.  A key beneficiary of the bounce-back we expect to see can be found in environmental insurance. How it can help an agent become more successful, and why agent must know about it, are topics worth considering.

It can be argued that contractors are the backbone of our economy. Without them, things wouldn’t be built or serviced, torn down or reconfigured.  Clearly, the contracting industry has been hard hit by the economic downturn. The construction trades in particular, along with infrastructure and service industries, have all seen record decreases.  Since the majority of insurance is based on either payroll or revenues, while these industries have contracted, so have many insurance agencies’ revenues.

We are begging to see a slow reversal of the steady decline of the last several years. Over the first four months of 2010, we have witnessed a noticeable stabilization in our contractor clients. Where we had seen annual double digit narrowing over the last two years, most renewals are now coming in slightly off, or flat, and in some cases, projecting some growth for 2010 into 2011. We are still seeing some contractors going out of business, but it seems that the ones who were going to fall already have.

In addition to the slow recovery from the abyss of 2009, we are seeing growth in our business fueled by a growing national awareness of environmental exposures. Even discounting the terrible situation in the Gulf, awareness of environmental issues has grown dramatically in the last few years. Starting with sophisticated commercial customers and lenders, and spreading to most facets of the construction industry, contractors are being required to prove their ability to address environmental problems that occur on job sites.

This growing awareness has come from several different directions. The first can be found in the media. Chinese drywall, toxic mold, silicosis, fires at treatment sites, and lawsuits against land developers have all brought environmental issues to the forefront. The tragedy in the Gulf will only continue to heighten that concern to levels never seen before. The potential for a significant environmental event impacting a business or property is no longer perceived of as a long shot. Now many people recognize the ramifications can be significant, and it is important for everyone who could potentially impact a property is properly covered in the event they do.

Taking that heightened consciousness to a new level will be an increase in awareness of what might be a “pollution” problem that was not expected to be one. A perfect example of this comes from the many recent losses stemming from erosion and sediment runoff at job sites. There have been a number of well publicized six and even seven figure losses stemming from this problem that were treated as pollution claims and declined by standard GL insurers.  Recognizing how broad the standard definition of a pollutant is, and also the very limited coverage provided by the ISO CGL form has lead to requirements for separate, identifiable pollution coverage.

Another impetus for coverage has come from the well-publicized understanding that coverage is available and affordable, now more than ever. In the late eighties and early nineties pollution coverage was something of a mystery. Now it is a well known, although not terribly well understood, product. Knowing that clients can afford to buy coverage, and that there are many venues for it, has lead to an increase in requirements for it.

The final driver for contractors to seek coverage comes from new regulations. An example is the new EPA regulation regarding lead paint. Effective April 22, 2010, the EPA began requiring all contractors performing renovation, repair and painting projects that disturb lead-based paint in homes, child care facilities, and schools built before 1978 be certified and must follow specific work practices to prevent lead contamination. Contractors have to be trained and be certified to evidence it. The regulation goes further, requiring any removal of possible lead containing material be done by properly trained lead abatement professionals. All of this brings environmental concerns to a huge number of contractors, and their clients, across the country.

A gradually increasing demand for these products is expected to continue. Complicating matters somewhat is the dramatic increase in the number of carriers and programs offering environmental coverage. Where there were ten to fifteen companies willing to write pollution-related coverages ten years ago, there are now close to forty today. While more may seem like a good thing, this comes with real risks for the agent. Environmental insurance is a unique class of business, with every carrier offering coverage in its own way.  While there are a plethora of products labeled “Contractors Pollution Liability, or “CPL”, they are each unique to the carrier providing them.  Companies may offer forms that appear on the surface to be the same as others an agent might have seen, but it is rarely the case that they are truly the same. In twenty years of working in this class, I have never seen two policies that offer the exact same coverage.

The recent entry of a number of admitted carriers does not help this problem. While their forms have been approved by the State, that does not mean they are the same as each other, or for that matter, that they offer better coverage than that offered in the Excess and Surplus market. Unlike standardized commercial property and auto forms, States do approve different environmental coverage forms. Admitted does give the agent the security of the State guarantee fund, but should not be inferred to mean the product is actually better in any other way.

It is crucial that agent review and understand the coverage they offer their clients to be sure it is adequate for what the clients do. There are many examples of forms in the market that have very restrictive language in them which can lead to inadequate coverage. Agents should request specimens of all policies and read them carefully before presenting terms to clients.

Once coverage is understood, the next hurdle is the carrier itself. The wide range of companies, new and old, requires the agent to make choices for the client. There are several key elements that should be considered. First is the overall rating of the carrier offering coverage. In today’s volatile world, the better the A.M. Best rating, the better off an agent will be in the long run. In addition to the Best rating, it is also very important to choose carriers that have made a commitment to work with environmental risks. This means those companies that have in-house environmental claims staffs as well as significant environmental underwriting departments.

It also helps to work with carriers that offer supporting lines of coverage. You may be looking for Contractors Pollution Liability for your street and road contractor, but the ability to add premises pollution coverage for their yard could dramatically enhance your proposal, and their coverage. Many of the top carriers offer a full suite of coverages, and this gives you the ability to round out the offering to your client, while also being a testament to their commitment to the line of business.

An additional benefit of the growing environmental marketplace is the range of products available, as well as the appetite for offering coverage. The top-tier carriers are all open to providing pollution coverage to a wide range of contractor types. A few years ago residential contractors had trouble getting pollution coverage that would include Mold. That has changed, so that now most companies are willing to cover those risks. This increased appetite has made it possible to cover this environmental exposure of most all contractors.

In addition to a wider appetite, the current market is trending toward providing broader coverage than what was available only a few years ago. Many carriers are offering defense outside the limits with a cap, blanket additional insured where contractually required, and limited site coverage. In addition, many of these carriers are willing to work with their agents to broaden coverage further. It is important to recognize that much of this coverage is negotiated, and “off-the-shelf” products are seldom the best deal you can get for your client. Educating yourself as to what may be available is an important part of working with environmental products.

One such enhanced coverage for contractors is Contractors Pollution Liability with Professional coverage including Mold. Very few carriers offer this coverage with Mold in both coverage parts. The Professional coverage is significant for a number of reasons. Most CPL policies exclude Professional, which therefore eliminates coverage for supervision of subcontractors. If a sub causes a pollution problem, and the suit alleges that the insured failed in their obligation to properly supervise that sub, professional coverage would come into play. Contractors also often make modifications on the job to plan items. A duct might get moved, and the resulting re-routing might lead to a mold problem. Again if that claim comes in as Professional, this coverage enhancement would suddenly be very important.

The final area that we believe bodes well for the environmental insurance industry is green technology firms.  This market segment has boomed in the last year, and with current events such as they are, the expectation is that significant growth will continue for the foreseeable future.  Many green tech firms are seen as excellent prospects by environmental insurance carriers, who are willing to provide a full range of coverages for them. While many of these firms are true contractors with a green tech focus, they are perceived as good risks due to the sophistication of the work they often do. The enhanced training leads to a better paid, generally better trained workforce, which historically has led to a better risk for the insurance carrier.

While the market is still very soft, and the overall economic fragility continues to keep companies in a very conservative posture, there is reason to believe that times are getting better. Finding additional coverage that enhances a contractor’s ability to compete and function effectively in the marketplace is a perfect way for agencies to not only serve their clients better, but to increase their revenue as well. In the changing marketplace, opportunities abound for the agent who wants to develop an understanding of this complex but valuable coverage.

• A property owner conducted Phase I and II Assessments prior to the sale of their facility. Soil and groundwater contamination was traced to a neighboring electronics manufacturing facility. The cause was an old raw material storage area that used to exist over gravel. This area is now over concrete containment. Total investigation, remediation and property damage claims exceeded $1.5 million.
• A property owner had his drinking water well tested prior to selling his land. Testing revealed that the well contained an alarmingly high concentration of total petroleum hydrocarbons. Further investigation revealed that the source of contamination was several dozen drums of waste oil and maintenance fluids buried on a neighboring farm. Though the previous farm owner buried the drums, the current owner was nevertheless responsible for disposal of the drums, soil and groundwater cleanup, and bodily injury and property damage claims submitted by the neighboring property owner. Total costs exceeded $1,000,000 and caused the farmer’s bankruptcy.
• A waste storage area without secondary containment was stacked with drums of a caustic substance. The caustic substance eroded the drums and spilled onto the ground, into an adjacent creek. Subsequent remediation involved the removal of contaminated waste from the premises and dilution of waste from the creek. Cleanup costs exceeded $170,000.
• The toxic presence of methane and hydrogen sulfide gases caused nearly 200 homes in a small town to be evacuated. The emissions were traced to a local coal-mining site. Approximately 350 residents sought compensation for personal injury and property damages. The coal mine operator paid more than $9 million in settlement and defense costs.
• Fuel oil from an oil refinery was found to have leaked from below ground sewer hubs that were connected to aboveground storage tank drains. By the time the leak was discovered, contamination was detected in three groundwater plumes and onsite groundwater was also contaminated. The refinery paid nearly $5 million in cleanup costs and attorney fees.
• An aluminum trailer was loaded with a caustic substance at a transfer station. The substance corroded the trailer, spilling on the ground into an adjacent creek off-site. Constituents of the waste included creosols, methylene chloride and sodium hydroxide. The remedial effort involved pumping contaminated waste from the premises and pumping diluted waste from the creek. Cleanup costs exceeded $100,000.
• A chlorine gas release at a wastewater treatment plant resulted in toxic air emissions. Area residents and businesses were evacuated and several people were hospitalized for inhalation of fumes. A total of 12 businesses were forced to shut down for the better part of a day. Bodily injury claims amounted to $70,000 and business interruption claims totaled $120,000.
• A wastewater treatment plant that was 25 years old had been upgraded several times over the years. Improper closure of an old clarifier and on-site surface impoundment had allowed gradual seepage into the groundwater. These constituents contaminated the underlying groundwater, which was a potable water supply for the neighboring community. The costs for groundwater cleanup and emergency water supply for residents totaled $550,000.
• A maintenance garage that used solvents for parts washing performed the work over a drain leading to an on-site septic system. Over time, the septic system leach fields migrated into the surrounding soils and groundwater. At the time of the septic system closure and conversion to a public sewer system, the contamination was discovered. Site remediation involved soil removal and the installation of a groundwater recovery system. The costs exceeded $720,000.

For information, please visit our website or call us at 1-800-596-2156.

For product details, download a Site Pollution product information sheet (PDF).