EIL Insurers Look To Innovate

To take advantage of new and changing opportunities in the environmental liability market, insurers are striving to be innovative by offering buyers new coverage options.

Gregory E. Schilz, a managing director of Aon's Environmental Group, said environmental impairment liability remains the most sought-after coverage, but a few markets are beginning to offer new versions, with some policies combining environmental with general liability.

Zurich North America is one market that is offering this type of combination coverage with its new “Z-Link” policy, which “enables customers who otherwise might not consider environmental insurance to purchase tailored-to-fit pollution coverage as part of their general liability policy.”

Julie Dunai, senior vice president of Zurich NA's Commercial's Environmental Unit, said Z-Link is part of an attempt by the company to grow its environmental book by reaching out to customers it had never targeted before.

Another coverage gaining interest, according to Mr. Schilz, is Owner's Protective Professional Indemnity, designed for owners of developments, offering errors and omissions coverage over the architect's or engineer's primary policy. He said there was one market offering this coverage until mid-year, and now three markets are offering it.

Before OPPI, Mr. Schilz said it was a challenge for developers to get their architects and engineers to increase coverage limits under their policies, or purchase project-specific E&O coverage. The architects and engineers would argue that the extra coverage was too expensive, and if they bought it at all, the cost was usually passed on to the owner.

Now, the owner can buy the coverage directly, and it responds as an excess policy that drops down over the primary professional liability policy of the architect or engineer, Mr. Schilz explained.

Rich Zarandona, senior vice president for professional liability, design and environmental for Arch Insurance, said Arch modifies its coverage over time to match the needs of the industry. To gauge the market, he said Arch assigns people to different environmental technologies, who become experts in their particular field by learning about new developments.

Mr. Zarandona said Arch also relies on the brokerage community to help the insurer understand environmental risks buyers are facing, and to stay on top of new and developing issues in the environmental exposure field.