By Brittany Skiles, Senior Underwriter

The environmental insurance marketplace is always changing and evolving. Whether it’s emerging pollutants, or new legal cases raising coverage concerns, it’s challenging for underwriters in new ways. Here are some of the top issues underwriters are facing in today’s marketplace.

E&S vs. the Standard Market

The E&S marketplace continues to grow, but a recent trend we’re seeing is that some lines of coverage are moving back to the standard market, especially Auto. Accounts with services and operations or loss history that have historically made them well suited for E&S placement have been recently drawn back to standard carriers as they look to overcome the softening property rates.  Whether standard carriers will attempt to write GL for some very limited environmental classes – or offer limited pollution coverage, remains an open question. Any such expansion would likely be narrow in scope and fall short of the coverage environmental risks truly need.

New Market Entrants

Another challenge underwriters face is new carriers and programs constantly entering the environmental space. Not necessarily bringing anything new to the table or distinguishing themselves from existing carriers, but instead saturating the market. More capacity adds competition and therefore drives premiums down. This isn’t just a challenge for underwriters, but also for brokers. It is a huge undertaking to learn new forms and potential gaps in coverage, to figure out how the new carriers/ MGAs handle claims, and find out if they’re financially stable or well rated. Some new entrants in the environmental space do so on a short-term basis and then exit quickly in 2-3 years. This ultimately causes disruption in the marketplace and leaves insureds to find a new home.

AI

While a useful tool, AI also presents its own challenges. It can generate very poor resumes for owners with little to no useful information and safety programs that have nothing to do with the insured’s industry or safety hazards. It has fabricated proposals instead of actual job contracts and has also misled insurance professionals in evaluating policies. It may take a keen eye to identify that these documents are AI generated and are often not helpful in underwriters basing their decisions. The AI policy evaluations can be inaccurate and are no substitution for true insurance knowledge and experience.

Poor Submissions

Certainly not a new topic, but poor quality submissions continues to be a challenge, as well as missing underwriting information. Basic information needed with a submission are Acord applications, a supplemental application pertinent to that line of business, and  currently valued loss runs. Incomplete Acords, sometimes missing 90% of the information, are far too common. The supplemental applications should be current. If the insured is a new venture, the submission should also include some information on the insured’s qualifications or experience. When underwriters receive a complete submission, those are the accounts most likely to go to the top of their stack to get quoted. In the long-run, this helps both brokers and underwriters get more accounts quoted and bound.

Price Shopping

Last but not least of the problems facing underwriters is insureds (and agents) shopping for coverage based on price alone. Quality coverage that properly addresses an insured’s exposures will naturally carry a higher premium than a policy riddled with holes and exclusions. Brokers should inquire if the carrier offers risk management or loss control services. It’s something that may set them apart from competitors. Quoting coverage from a carrier with a solid AM Best rating is important. One with a low rating or lacking in long-term stability may force an insured to change markets in the next year or two.

These aren’t just challenges affecting underwriters, brokers also deal with some of these issues on a daily basis. But recognizing the challenges can help both underwriters and brokers work to overcome them and be more successful placing and retaining business.

Do you have any account you’d like to discuss with the PartnerOne Environmental team, contact us today.