Top 10 Environmental Trends

Top 10 Environmental Trends

Source: http://www.propertycasualty360.com, February 4, 2013
By: Bryant Rousseau

1. Contingent Business Interruption cover is driving a lot of interest in the line, especially among hospitality clients. Companies with substantial international supply chains also are increasingly considering acquiring Contingent Business Interruption cover in case an environmental incident shuts down a supplier.

2. Mold is a source of increased concern for real estate and health-care clients.

3. The jury is still out on just how much risk is posed by nanotechnology—and whether it’s an Environmental risk or a Product one. If nano particles get into a landfill and are able to migrate out through “impermeable” barriers because of their size, then an incident is likely to be seen as an Environmental exposure.

4. Carbon sequestration presents special underwriting challenges because of the potential legacy issues. While it’s not as hot a topic today as it was three or four years ago, Marsh expects it’s going to come back.

5. One impact of the recent financial crisis is a greater awareness of counterparty credit risk, with people saying: “OK, I’ve got this Environmental indemnity—but how good is it?” So Marsh is structuring insurance programs in such a way that they will drop down in the event of an indemnity failing (due to an Environmental loss).

6. The post-Great Recession world also has created an environment in which banks are much more aware of the risks of the organizations to which they are lending. Marsh is seeing a trend where lenders are saying, “In order to refinance, I expect you to have an Environmental insurance solution in place.”

7. Buyers of Pollution policies for their operational risks could typically get three, five or even 10 years of coverage. But over the last couple of years—and especially in 2012— carriers have desired to reduce the amount of longer-term programs they write in favor of three-, two- or even one-year deals.

8. Outside the U.S., there is certainly environmental regulation—but not as much enforcement. So the driver for buying is more about managing cash flow and first-party loss—and less about fear of being sued.

9. Among the trends in the private-equity space: Five years ago, private-equity players were more inclined to keep Environmental risks on their books. Now, with pricing so competitive, it’s a no-brainer for them to transfer the risk to an insurance program.

10. Telecommunication companies with fiber-optic networks and solar-panel manufacturers are two growing sources of Environmental placements, according to Janet Carl, a senior member of the Marsh Environmental team.

 

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