Tightening conditions in the market for environmental insurance point to a hardening market, where buyers see higher deductibles and a decline in limits and capacity in certain areas, experts say. substances, known as PFA and exposure to indoor air quality related to mold and legionella, drive insurers' review of insurance policies.
PFA are artificial chemicals that have been manufactured and used in various industries since the 1940s and can contaminate drinking water. and groundwater, which causes adverse health effects in humans.
The environmental insurance market remains stable but shows the initial stages of a hardening market, says Gene Nosovitch, Allentown, Pennsylvania-based commercial insurance consultant at HMK Insurance, an Alera Group company.
"We are seeing a slight increase in premium renewals, anywhere between zero to 3% increase, but we are also" when we see some narrowing in terms of borders, "says Nosovitch.
For larger companies that typically buy anywhere from $ 50 million to $ 1
Like other industries – such as property, management and over-liability, the insurer's environmental insurance capacity decreases, says Tony Lehnan, Chicago – based CEO of Environmental Practice at Arthur J. Gallagher & Co.
Where insurers might have been willing to put up $ 25 million for a risk, they are now withdrawing to $ 15 million, depending on the account and the type of environmental coverage, Lehnan said.
He cited the example of covering liability for a municipal account that is renewed this year where the insurer is already withdrawing limits and reducing the coverage.
The insurer also removes some contamination of products
"But if you have an electrical contractor, someone who does not have much risk, insurers will be very aggressive to write" that
Several large insurance companies, most recently Zurich North America, has withdrawn from the market for pollution liability in recent years.
"Zurich has decided not to renew certain environmental coverages and no longer offers permanent site pollution or environmental pollution insurance," a company spokesman said in an email.
Zurich still provides insurance for environmental contractors and environmental consultants.
"The portfolio has shrunk in recent years with continued profitability challenges," the spokesman said. the environmental insurance market, says Arthur Lu, Head of Global Environmental Liability at Allianz Global Corporate & Specialty, part of Allianz SE, New York.
Disputes are also a problem. "We see more plaintiffs 'lawyers involved. The legal cost from the insurers' perspective is to see an increase," he says.
For a long time, the coverage for PFA was under environmental policy quietly, Lu said. "Fast forward to today, more has been done to eliminate this pollution," he said.
"If you are a chemical manufacturer that may have treated this type of compound, it may be questioned whether insurers would be willing. to provide historical coverage, says Lu.
It is common for insurers to use retroactive dates or site-specific exceptions to "get around the potential problems that arose in the past but that may raise their heads in the future," he said.
Environmental damage costs are rising, Nosovitch said. He cited a recent alleged claim in the retail gas industry that resulted in a loss of $ 1.5 million because the company that handled the petroleum emission treated it with a chemical that caused more contamination. "That would have been a claim of $ 50,000 four years ago," he said.
Positive factors for the environmental insurance industry include an increase in construction activity and in mergers and acquisitions that come from the pandemic, say brokers.
"Opportunities for changes in infrastructure and energy policy lead to construction activity in solar, wind and geothermal projects," said Tim Donnellon, Charleston, South Carolina-based senior environmental broker, at Burns & Wilcox Ltd.
Construction will generate risks and greater demand for environmental insurance, Donnellon said.