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But WTW has reported that the environmental insurance market is showing signs of growth despite the uncertainty caused by emerging exposures. The environmental insurance space can be a daunting prospect, but qualified brokers can help policyholders navigate through this increasingly complex market.
insurance business spoke with Jim Hamilton (pictured above) and Sean McLaughlin (pictured below), Environmental Practice Group Leader and Broker, respectively, for CRC Group’s CRC Environmental Brokerage, to learn more about the current state of environmental insurance and what the brokerage is doing to support its clients.
What is the situation of the environmental insurance market in 2022?
Jim: The current environmental insurance market can be characterized as more aggressive than the traditional P&C market. In general, the market is very stable and there is a lot of capacity. CRC Group recently placed a $400 million tower for monoline pollution, one of the largest towers in the last decade, and developed listings in just over a week, which is a testament to the capacity currently available.
be: There have been a number of new entrants, either through MGAs or MGUs, which has helped keep some environmental insurance products soft.
Jim: However, there are segments going strong for specific industries and products, such as mold coverage for multi-family residential and hospitality and frame construction projects, as well as professional contractors for design-build construction delivery methods. Site contamination coverage, while stable in pricing and coverage for most exposures, is strengthening for hospitality, health care facilities, educational facilities, residential (condominiums, single-family homes, townhouses), and certain multi-family exposures, largely due to mold. losses.
Are perfluoroalkyl and polyfluoroalkyl substance (PFAS) declarations still a major issue among airports/landfills/wastewater treatment facilities/industrial sites? What can be done to address this?
Jim: PFAS remain a hot topic in the environmental and general liability insurance markets. Often used in various consumer products and foam fire suppressants, they are generally considered the next asbestos, capable of affecting all industries and sectors in some way.
be: To date, the insurance industry has not seen an overload of claims, but the exposure still exists. Carriers are positioning themselves to protect themselves in the future because there will be claims in the future.
Jim: Once there is a national cleanup standard and accepted toxicity level established by the US EPA and state regulatory agencies, PFAS regulations will spread and the frequency of claims will likely increase.
What do you think about the SEC’s proposed climate disclosure rules? How does this affect insurers and their customers?
Jim: The SEC now requires detailed reporting of climate-related risks, emissions, and net-zero transition plans, which certainly affects our Policyholders. Insurance companies are feeling increased public pressure from an image standpoint to support policyholders who take these initiatives to help address climate change. Clients and insurers are generating new ESG claims and many operators are no longer willing to offer coverage to those they consider to be high polluters, such as the coal industry.
be: Over the past 10 years, what began as a cottage industry has become more mainstream as new entities emerge to help address carbon disclosures, such as carbon credit banks and other financial mechanisms. Shippers may not yet have a full understanding of the carbon credit industry as it continues to evolve. However, we have seen significant growth in that area and received more submissions in the last year than in the previous 5 years combined.
What role do environmental insurers play in the fight against climate change?
Jim: Carriers may choose not to underwrite specific classes or businesses with a real or perceived industrial impact on climate change. For example, several insurers have exited the General Civil Liability or Environmental Insurance market for coal-based companies or those involved in fracking.
be: They have also become more aggressive in appetite, hedging and pricing to support and promote Alternative Energy operations.