Page 23 - 2016 State of the Market from AmWINS

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The highly competitive state of the environmental insurance Demand for environmental coverage has grown as the economy
market is best illustrated by what happened after AIG’s has recovered. In particular, new construction activity and
announcement in February that it would no longer write mono- contractual liability demands faced by builders has spurred
line site environmental liability/pollution legal liability coverage. growth in both site pollution and contractors pollution liability
(CPL), as well as contractors professional liability. At the same
“When AIG pulled out of the market, it had absolutely no time, owners and general contractors are demanding higher
hardening impact,” says Joe Constantine, senior vice president limits of coverage by contract.
and casualty broker at AmWINS Brokerage in Seattle,
Washington. In fact, quite the contrary. No notable legislation has impacted the line in recent months.
Even high-profile environmental incidents, such as the
“After the announcement, we immediately began getting calls contamination of the water supply in Flint, Michigan, have not
from insurers offering to roll our AIG book,” says Evy Hazenberg, had the expected impact.
vice president and casualty broker at AmWINS Brokerage in
Grand Rapids, Michigan. “With the flurry of news that Flint received, we’re frankly surprised
that we haven’t seen more requests for CPL coverage from
More than two dozen markets exist in the environmental contractors doing remediation work,” Hazenberg says.
specialty marketplace, with many more standard lines carriers
offering some type of coverage in the sector. Recent entrants Carriers continue to broaden coverage on all product lines within
include Lloyd’s and Berkshire Hathaway Specialty Insurance, the environmental space. Some examples include defense
which expanded its U.S. casualty capabilities to include pollution costs outside the limits, non-owned site coverage, mold on
exposures. an occurrence basis and providing unknown pre-existing
conditions without any environmental reports. “It is of the utmost
“With the capacity we’re seeing now, we’ve dipped to the importance to examine differences among carrier offerings, from
point where even if accounts have had a few claims, insurers the broadened enhancements all the way down to the definition
aren’t shying away,” Constantine says. “Everyone is fighting for of ‘pollutant’,” Hazenberg says.
crumbs.”
“The environmental insurance world has reached the point where
Within this buyer-friendly environment are some exceptions. The the only remedy to make up for lost premium is to expand into
environmental landscape continues to look like a pyramid: ample other lines,” says Constantine, who is now seeing many carriers
capacity and fierce competition for easy-to-place contractors write classes of business that have traditionally been non-
and consultants at the bottom, and less of an appetite for the environmental.
trickiest risks at the top.
“Markets are now working together internally to provide
Environmental impairment solutions for contaminated properties, combination policies such as environmental impairment/reps
cost cap solutions, financial assurance issues, long-term (10+ years) and warranties or environmental impairment/product recall,” says
policies, and highly hazardous products still pose a challenge in the Constantine. “When thinking about a risk, environmental or not,
market, according to both Constantine and Hazenberg. don’t rule out an environmental market.”

• New entrants are adding to expansive capacity in environmental.
• Carriers are increasingly willing to compete on coverage expansions.
• The uptick in construction and more stringent lender requirements are driving

demand.
• Long-term policies remain hardest to place.