In Focus: Packaged policies, solar energy spark growth in environmental insurance

In Focus: Packaged policies, solar energy spark growth in environmental insurance

Source:, March 13, 2014
By: Brian Anderson

Nearly every commercial client with a fixed facility carries some level of environmental risk, making them all strong candidates for Environmental Impairment Liability (EIL) coverage. As most businesses don’t currently have this coverage, this is a big opportunity for agents.

Standard EIL coverage addresses both on- and off-site cleanup, bodily injury and property damage liability, legal defense costs, business interruption, diminution of value and contracted liability coverage. And it’s not as expensive as clients might think.

Agents can tap into this market by examining their existing books of business to identify clients that would benefit from EIL coverage, and also by making use of data readily available on the Environmental Protection Agency website, which lists all facilities by zip code that have taken out hazardous waste permits, air permits or Clean Water Act permits.

What’s really hot right now in the EIL market, according to David Brereton, EIL Program Manager at Denver-based Freberg Environmental Insurance, is the packaging of policies. EIL can be combined with Commercial General Liability (CGL), Comprehensive Personal Liability (CPL), Professional Liability and Products Pollution.

“Generally, there’s a trend toward packaging coverage for obvious economic reasons,” Brereton said. “That’s where we’re seeing the most growth right now.”

Another hot spot for EIL right now relates to transactional business, as in when clients are buying a property. “A buyer wants to be protected if a preexisting condition should rear its head,” Brereton said.

There has been an uptick in transactional business, including refinances and purchases, as companies rush to close before interest rates go up, Brereton said.

California agents: check out solar sector
Freberg Senior Vice President Cindy White, who is the Program Manager for the company’s biggest unit, its environmental engineers, consultants, and contractors (ECC) program, says business on her side tends to remain very consistent and steady, with few notable spikes. But one spike she is seeing is in the solar panel contractors and solar panel design engineering risk markets, especially for pollution-only coverage. “We’ve been seeing a lot more of that in the past year,” White said, adding that it has been particularly hot along the West Coast, following utility provider incentives and supportive solar policies in the region.

California leads the nation with more than 87,000 solar energy projects and counting. According to the California Solar Energy Industries Association (CSEIA), there are currently more than 1,678 solar companies at work throughout the value chain in the state, employing nearly 50,000. In 2013, California installed 2,746 MW of solar electric capacity, ranking it first nationally. Even more telling, $7.1 billion was invested in California in 2013 to install solar for home, business and utility use, representing an 83% increase over the previous year. The CSEIA expects growth again in 2014.

A Nov. 2013 release from Marsh noted that renewable energy projects often require project owners to consider various risk transfer and risk mitigation measures to address an array of potential exposures, including construction, environmental, regulatory, technological, and operational risks. Environmental risks are inherent throughout the life cycle of a project, and need to be identified in the early developmental stages of a renewable energy project. Some of these risks may stem from ground and soil conditions. Site selection is also a potential risk for project owners.

Site liability (ESL) and CPL coverages typically need to be in force for the construction phase of a project.

In this new weekly In Focus series, Insurance Business America investigates, highlights and explores market conditions and growth strategies for independent agents and brokers. This week, IBA explores opportunities in the environmental market.

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