ENVIRONMENTAL INSURANCE AN OVERVIEW AUGUST 2017

Transcription

1 ENVIRONMENTAL INSURANCE AN OVERVIEW AUGUST 2017

2 Insurance 101

3 The Stats 14%

4 The Stats >50%

5 Historical Review History of the Environmental Movement and Cornerstone Regulations that lead to Environmental Insurance Market Exclusions 1970 NEPA 1976 RCRA 1978 Love Canal 1980 CERCLA Tanker Spills World War II

6 U.S. Environmental Insurance Marketplace

7 Market Update & The AIG Factor The largest Insurance provider for Pollution Legal Liability/Site Liability in 2015 $500,000,000 of Inforce Domestic Pollution Legal Liability premium being Non-renewed over 36 Months $250,000,000 of Annual Domestic Pollution Legal Liability premium being non-renewed In 2015, over 70 dedicated Pollution Legal Liability underwriters being repositioned within and outside the company A continued emphasis on the growth of Blended Casualty/Environmental products for Distributors and Manufacturers Will remain a market for Site Liability pollution coverage for international exposures only

8 2017 U.S. Environmental Insurance Marketplace (Sampling)

9 Pollution Insurance Product - Characteristics Retrospective Moral Hazards Unique Coverage Forms Complexity

10 Environmental Insurance Drivers Risk Transfer Contractual Obligations/Liabilities Regulatory General Awareness Client Recently Experienced an Uninsured Claim

11 Environmental Insurance Why? Where are the Gaps? Program Alignment

12 Environmental Insurance Products (Sampling) Today s Product Mix Site Liability - Pollution Legal Liability (PLL)/Environmental Site Liability/Premises Pollution Liability/Environmental Impairment Liability Blended Casualty & Pollution Products Contractors Pollution Coverage Storage Tank Liability Insurance Secured Lender Insurance Contractors Pollution Liability Professional Liability (E&O) Business Interruption Environmental Product Liability

13 Site Environmental Liability Typically protects owners and operators for liabilities or claims arising from a pollution event including: Bodily Injury Property Damage Clean Up Costs Defense Costs Transportation of Waste May be tailored to 1 st party (on site) or 3 rd party (off site receptors / impact coverages)

14 Blended Casualty & Pollution Product Expanded marketplace Combines CGL and pollution extensions with affirmative insuring agreements Products pollution (occurrence) PLL coverage can be integrated, similar to standalone PLL Transportation and Disposal Liability

15 Contractor General and Professional Pollution (E&O) Coverage Provides Coverage for standard Pollution Exclusion Covers gradual, as well as, sudden and accidental thirdparty environmental liabilities resulting from Your Work. Provides coverage for damages that arise out of out of errors or omissions while performing professional services Been around for a while but getting more thorough with less exclusions and more markets Rectification / Mitigation Coverage Extensions

16 Underwriting Exposure Review Regardless of Industry attempt to understand: Materials on-site Storage Practices Atmospheric emissions Disposal practices Historical site use & surrounding environment Transportation risks Products Pollution exposures Development Plans / Project Plans

17 Claims Process Billions in claims paid Proactive Involvement (at In-take) Communication Process Expectations Relationships

18 Environmental Insurance Marketplace Survey Questions Posed to Industry Professionals 32 Responses; Doubled Responses of Prior Year Data Collected, Aggregated, and Analyzed by Survey Monkey

19 Environmental Why Clients Purchase

20 Environmental - What Clients Purchase

21 Case Study #1 Atlanta Beltline Apartment Redevelopment Former Industrial - Phase I conducted, with no significant findings PLL Coverage bound in year term / $1m limit / $30k premium

22 Case Study #1 Impacts discovered when parcel was subdivided TCE/PCE, Lead, benzo(a)pyrene, cadmium and mercury above Type 1 RRS in soil Claim tendered against the policy 5,500 Yds of soil removed Total costs paid by insurance at >$900,000

23 Case Study #2 University portfolio of properties Long-time purchaser of PLL coverage Acquired an old hotel to convert into a dormitory Renovation activities completed prior to fall incoming class

24 Case Study #2 Renovation activities failed to replace carpet but instead steam cleaned two weeks prior to student arrival Students arrive in August hot, humid ambient air conditions A/C turned on and windows were opened Claim tendered for mold Over $1,000,000 in abatement, restoration costs and business interruption

25 Case Study #3 Developer purchases an older strip mall with historic dry cleaning operations Significant solvent impact in soils on-site and groundwater on- and off-site Developer applies for BFPP with state Responsible for source removal Limitation of Liability for groundwater and off-site impact Developer also purchases Site pollution policy

26 Emerging Issues Indoor Environmental Quality - Legionnaires Ø Ø Ø 2015 South Bronx, NY Incident August 2015 Emergency Regulations passed in the State of NY and NYC Other States (aging infrastructure Flint, Michigan) Energy - Utility and Power Industry-Coal-Ash Impoundment Facilities Ø Ø Closure Requirements and Heightened Oversight from EPA and State Agencies 3 rd Party Litigation and claims from Property Damage and Bodily Injury (NRD) New Administration / Politics Ø Ø Citizen Suit Increases (changing political landscapes) Social Media Activity Emerging Chemicals / Contaminants Ø Ø PFOAs / Waste Water Systems Enhanced Laboratory Detection Levels Policy Interpretation / Case Law (what constitutes a pollutant and is therefore excluded from the CGL) Cyber Liability Risks

27 Closing Thoughts Growing Industry Dynamic & Creative Marketplace Relationship Driven / Technical Marketplace Emerging Issues Create Continued Demand