Ten things to know about environmental liability

1. The market for environmental insurance products remains fluid and highly competitive. Although some carriers raised rates, aggressive pricing and terms are still prevalent. Pricing expectations are flat to 10 percent lower than in 2012. (Marsh, Jan. 2014)
2. Virtually all markets are keen to write short (typically one- to three-year) policy terms. Many carriers have cut back on offering longer-term limits, particularly with new conditions. (Marsh’s Environmental Newsletter, Jan. 2014)
3. Loss experiences in the environmental insurance industry are likely to start challenging the notion that environmental loss is a low frequency, high severity event. Several environmental insurers have hinted they are experiencing an increase in claims. (Marsh’s Environmental Newsletter, Jan. 2014)
4. Last year’s Colorado floods resulted in flood waters dispersing fracking and other oil and gas exploration chemicals. Although it is too soon to determine the effect on rates, the floods may result in pollution from floated tanks, release of chemical-laden water and release of oily residue and cuttings from mud pits. (Marsh’s Environmental Newsletter, Jan. 2014)
5. The U.S. Environmental Protection Agency estimates there are more than 450,000 active brownfield projects in the United States collectively leveraging some $14 billion in cleanup and redevelopment funding. (Aon Risk Solutions’ Environmental Services Group report, Aug. 2013)
6. The previous generations of remediation cost cap products have vanished, but a few carriers are offering new products. The new cost cap products provide a narrower scope of coverage with a variety of conditions that have been added to restrict the potential protection provided. (Aon Risk Solutions’ Environmental Services Group report, Aug. 2013)
7. New cost cap products include AXIS Insurance’s environmental remediation management policy, which is designed for owners and developers. And Beazley will work with contractors to support their guaranteed fixed price remediation contract practice. (Aon Risk Solutions’ Environmental Services Group report, Aug. 2013)
8. As multinational corporations seek merger and acquisition growth across the world, they confront expanding environmental liability regimes. Liabilities encompass a range of perils, including pollution, contamination, mold, hazardous waste and toxic chemicals in water, air or on land. (Ace USA’s report “M&A Risk Management: Global Environmental Liability,” June 2013)
9. Laws can hold entities responsible for environmental damage and force them to clean up contamination even if they aren’t responsible for creating the problem. Any organization that generates waste, or owns or manages property, can be at risk of producing environmental damage. (Liberty Mutual’s online newsletter, Liberty Directions)
10. Construction projects face various environmental exposures. Potential consequences could include: investigation and cleanup costs, cost overruns, third-party bodily injury/property damage, legal defense expenses, fines/penalties and project delay/soft costs. Environmental risk management products for construction projects include contractor’s pollution liability (CPL) and site pollution legal liability (PLL) coverages and cost cap. (Marsh’s report “Building a Solid Foundation,” Jan. 2014)