Soft Market Even Affecting Pollution Coverage

The soft market cycle for insurance has traditionally left environmental pollution coverage alone. Not so anymore. National Underwriter’s feature article for a recent issue highlights the changes.

Thanks to the current economic downturn, real estate and construction have fewer projects going and thus have lower demand for pollution coverage. That combined with increased supply have caused prices to drop. Prices are dropping between 10 and 35% depending on the size of the risk – larger risks are experiencing renewal decreases up to 35%, smaller risks are seeing smaller premium decreases.

Primary insurance players include ACE, AIG, Chubb, Liberty Mutual, XL and Zurich. It is now being bundled with package policies for not a lot of money. Stand-alone policies, however, are still the norm for complex and large risks.

Every business has an environmental exposure, but most are not aware of it. “Unfortunately, too many insureds become acquainted with their environmental exposures by suffering a pollution loss, only to discover coverage doesn’t exist because it was excluded from their standard policies” according to Howard Tollin of Aon.

Pollution coverage is often ignored but is still one of the most affordable insurance coverages. The cost is modest relative to the catastrophe risk coverage that is provided.