How Spikes in Commodities Pricing Present Opportunities For Insurance Producers
By R. Ivy Riggs, CPCU, ASLI, AIS
The prices of common commodities have soared sharply in recent months. From oil to wood and from copper to aluminum, many resources have experienced a rapid jump in cost as demand has outstripped supply due to economies reopening after the long slump driven by the Covid-19 pandemic. But rather than seeing these increases as a problem to outwait, a more useful approach is to view them as an opportunity to grow your business with a shift in strategy. This shift hinges on the fact that many commodities are partially or completely recyclable, so recovering these materials for beneficial reuse just makes good business sense when supplies are constrained or pricing is prohibitive.
But how real is the opportunity? Far more real than you might recognize, because the sheer number of entities engaged in materials recovery is both large and growing. While many specialists exist in this space, all recycling enterprises can be grouped into one of three broad categories: community-based collectors, manufacturers, and generators. The first category includes businesses such as scrap metal dealers, used oil collectors, and curbside recycling programs. The second category involves those who create new marketable products through resource recovery, such as through pallet refurbishing, roof shingle repurposing, or concrete crushing and salvage. The final group can include schools and universities, retailers and grocers, or restaurants and hotels; these operations generate waste, the cost of which can be offset by beneficial recycling.
Because every single one of these entities has potential pollution exposures, savvy producers will be targeting them for opportunities to package their environmental risks with other lines of commercial insurance. These may include General Liability, Employers Liability, Business Auto, Site Pollution Liability, Products Pollution, or Excess Liability, just to name a few. As an example, we recently underwrote a $2M family-owned and operated recycler specializing in paper, plastic, aluminum, steel, tin, and glass recovery. The insured purchased GL, Site Pollution, Commercial Auto, Workers Compensation, and Excess for a total premium of just under $130,000. Keep in mind this was only a relatively small recycler, so your growth potential becomes only more magnified as you pursue larger accounts or add further lines of coverage (e.g., Property, Crime, Cyber Liability, etc).
As PartnerOne is successful only where our insurance producers are successful, we have every incentive to help as you strategize new ways to access this lucrative and growing field. Please reach out to us with any questions or to discuss new opportunities that may cross your desk to see what we might be able to offer you and your valued clients.