The environmental insurance market will remain robust in 2007,and available construction-related pollution and professionalliability products have buyers' attention, a specialty intermediaryfirm for retail agents and brokers contends.

The forecast came in the “New Day Underwriting Market Update2007,” produced by New Day Underwriting Managers LLC of Bordentown,N.J.

Among its findings:

o During 2006, available contractors pollution liabilitycapacity exceeded $300 million, with the most any one carrier couldoffer remaining at $50 million.

o Buying motivators for CPL typically fall into fourcategories–contractual requirement, asset protection, regulatoryrequirements and loss events. Contractual requirements have alwaysbeen and continue to be the primary driver to buy.

o The market appears to remain relatively flat, with increasedcharges for high-risk activity and extensive form modification.

o As a result of a “softened” market, carriers appear morewilling to offer enhancements rather than reduce price.

On contractors professional liability:

o Today, approximately 15 domestic and foreign carriers arewilling to offer various forms coverage with a variation ofunderwriting appetites.

o Annual premiums are estimated at approximately $250 millionand growing at a rate of about 15-to-20 percent each year.

o The professional liability marketplace continues to move backto profitability. Even though the past three-to-four years appearto have been profitable for many, rates still seem to beincreasing.

o Rates will typically track with standard professionalliability market rates, with up to 10 percent rate increasesexpected for 2007 on accounts performing well (that is, lowlosses). Rate increases will vary based on the carrier.

o Rates are increasing modestly, but premiums are increasing asgreater rate revenues and exposures increase for many growingcontractors.

o Many contractors are experiencing, on average, revenue growthof 25-to-40 percent. This appears to include firms generatinghundreds of millions of dollars in revenue, and this revenue growthhas a significant impact on the overall cost of their programs.

o Combining all domestic and foreign markets, available capacityremains approximately $150 million for each claim/aggregate limit,with $25 million for each claim/aggregate the most any one carriercan offer.

o While no insurance carriers are expected to exit the market in2007, there is a strong possibility for new entrants to enter,especially entertaining the middle market.

o The two reasons motivating buyers are contract requirement andasset protection, although another emerging trend is the owner's orgeneral contractor's requirement of a contractor to purchasecoverage, regardless of whether or not the firm is providingprofessional services.