Strong Presentation, Complete Form Needed For Environmental Coverage

Strong Presentation, Complete Form Needed For Environmental Coverage

By Mark E. Ruquet

When submitting applications for environmental or pollution insurance, there are a few basic points that independent agents need to remember to help their clients get the necessary coverage at the best price.

First–and it goes for virtually any type of application–agents need to make a complete submission, said Bill Pritchard, president of Beacon Hill Associates Inc., an environmental wholesaler based in Charlottesville, Va.

This is “critical,” he said, adding that his own firm is so busy with requests for quotes that they cannot review incomplete forms.

The best thing for the agent to do, he added, is to make sure he or she understands what is needed before submitting the form.

The submission should include information about the professionalism of the insured. Quality control practices and lists of equipment are important, he noted. For instance, if the client has new equipment (oil trucks was his example), it would “go a long way to getting a carrier to cover the client.”

The clients training and procedure policies to address environmental or pollution events for their business should be included. A client who has no plan in place can expect to see double or more on the premium charges, Mr. Pritchard noted. When the client does its part to address the exposure, it makes transferring the risk to an insurer reasonable, he said.

A client needs to demonstrate that they do not have a high frequency of loss.

“They have to demonstrate that they know what they are doing,” said Mr. Pritchard, adding that the comfort level that insurers have with the frequency of claims varies with the clients business field.

The agent his- or herself must look at and understand the coverage the client is purchasing, he said.

There is little or no standard policy, Mr. Pritchard explained, when it comes to these policies. An agent may think that the form is standard, but they can vary dramatically.

“There is a lot of homework involved in this process these days,” he advised.

For small agencies, he suggested, agents should partner with environmental experts to get the information and expertise they need to present a completed form.

After putting all of the information together, said Mr. Pritchard, the agent needs to make as “strong a presentation as you can” on behalf of his or her client. And, he added, if there is a lot of exposure, the agent or broker must make the company aware of it to determine what price and coverage would be offered and if it is acceptable to the client.

Helping agents through the process, wholesaler National Environmental Coverage Corp. in Chestnut Ridge, N.Y., has developed its Web site to include information on environmental and pollution coverage and applications. The site also has a glossary of definitions to help brokers and agents who are not familiar with the field.

Christina Holmes, president of NECC, noted that the coverage for contractors and site pollution has been around for almost a decade. However, a broader awareness of pollution liability has created a demand for this product and the challenge for insurers to increase limits to meet those needs, which they are working to meet.

She noted that while an agent can fill out a standard ACORD form to obtain quotes, it will not be binding until it is on the wholesalers application.

Information on environmental insurance available to agents on the NECC can be found at www.necc.com. Beacon Hill Associates Web site is www.b-h-a.com.

Reproduced from National Underwriter Edition, March 24, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.