Marketing
Environmental exposures
FEI is a go-to firm for this often overlooked risk
By Phil Zinkewicz
Let’s suppose you have a client who is going to open up a small business—a dry cleaning store, for example. He’s found a good location, and he and his suppliers have put together a business plan for the management of the store. The client comes to you for insurance. He’ll need fire and theft and general liability, of course. That’s easy enough. Your agency probably represents any number of carriers that will offer your client a standard BOP package for these exposures.
But what about business interruption coverage? A fire in your client’s store or a shutdown of basic utilities for days or weeks could be costly enough to put him out of business. So you arrange business interruption (BI) coverage. But that won’t cover your client if one of his suppliers shuts down. Therefore, you need to provide contingent BI as well.
With all that done, you’ve covered any possible loss situation, right? Well, not necessarily. According to Michael J. Hill, CPCU, president of Freberg Environmental, Inc. (FEI), almost any business can have some sort of environmental liability exposure, including your client’s dry cleaning operation. Dry cleaning stores use particular chemicals every day, sometimes hazardous ones. Does your client know how to store them, use them, dispose of them? Does he know how to comply with regulations regarding these hazardous materials?
Specializing in the development, marketing and underwriting of environmental insurance programs, FEI was founded in 1991. The firm works closely with brokers and agents throughout the country to identify current and future market needs and opportunities in the environmental arena. “Our staff of environmental and insurance professionals is trained to quickly meet the needs of our agents’ customers, particularly small businesses that may not be aware of their environmental exposures or what coverages they need,” says Hill.
Hill boasts more than 20 years of underwriting experience, working for large multiline carriers as well as small, highly specialized companies. Fifteen of those 20 years included underwriting environmental coverages. Working with Hill at FEI are Stacy D. Brown, senior vice president and product line manager, who administers FEI’s pollution legal liability and storage tank programs and who is responsible for reviewing technical specifications for environmental projects and for reviewing qualifications for environmental consultants and contractors; John Fusie, assistant vice president and transportation manager, who is responsible for new product development along with trucking, retail/wholesale petroleum and agribusiness underwriting; and Cindy Worthington, vice president and territory manager, who is responsible for underwriting environmental engineers, consultants and contractors.
“All we do is underwriting,” says Hill. “We do not do any broking. We have a staff of 36 employees and support a 50-state network of roughly 600 independent agents. Our products include hazardous waste transportation liability insurance for transportation companies, environmental protection liability, pollution legal liability, comprehensive general liability insurance, contractors pollution liability insurance and professional liability for environmental consultants and engineers. Limits of up to $10 million are available.”
“A good many agents are not aware that their clients have environmental exposures,” says Brown. “Besides the underwriting of environmental exposures, we also spend a good deal of time educating our agents as to the environmental exposures that may exist. We spend a lot of time on the phone with agents and direct them to appropriate Web sites. If an agent’s insured is financing a new building, that insured might need environmental insurance. Sometimes it’s a matter of satisfying regulatory requirements. If an insured is buying a garage, there may be underground storage tanks, which may require broader coverage. We assist the agent in knowing what to look for.”
FEI uses three markets for its products—Hudson Insurance Company, Arch Insurance and Lloyd’s of London. “Hudson is our market for our environmental engineers, contractors and consultants program,” says Hill. “FEI’s environmental insurance package provides the important coverages the agent’s client needs. The package also provides supplementary coverages and payments that other companies do not include. Hudson is also the market for our above ground/underground storage tank programs.”
Arch is the market for FEI’s hazardous waste hauling programs. “FEI offers policies to meet the insurance needs of individuals involved with hauling all types of hazardous waste and materials,” Fusie says. “Coverage may be rated to meet customers’ specific needs based on gross revenue, mileage rating or scheduled vehicles. We are able to accommodate all customers’ filing and financing needs.”
Stable market
Hill and his associates describe the current environmental market as “stable,” as it has been for the past few years. “There are about 10 companies that do environmental business,” Brown says. “Some concentrate on engineers and contractors environmental liability; others do site pollution. I think the market for site pollution liability insurance has not been tapped to its full potential. The new softening market in the general insurance business presents some opportunities for us. Some insureds have been reluctant to pay for site pollution insurance because they have viewed it as too expensive. But if prices come down, that might be a different story.”
Worthington agrees that the market is softening. Her area of expertise consists of engineers, contractors and consultants. “I have already seen the competitiveness in the marketplace, and I’m sure it will continue for quite a while. I can see it in the real estate market as well. Let’s say there’s a real estate transaction where the property has been contaminated. With proper documentation, we could write that.”
Evy Hazenberg, of the Grand Rapids, Michigan, office of AmWins Brokerage, says that her firm has worked with Freberg for about 10 years and that she personally has been associated with FEI for about six years. “Basically, when a retail agent comes to me with a client that needs environmental liability insurance, I then work with Freberg to put together a package. The coverage is usually in the contractors liability area. Site pollution is in the minority of our cases.”
The package approach is one that Hazenberg recommends, at least for contractors. “My job is to explain to the agent that a package approach towards environmental insurance is preferable because when a claim arises, it’s better to have one carrier to deal with rather than multiple carriers.
“We think that the reason small businesses have not rushed headlong into buying environmental insurance is the price. Buyers of insurance perceive it as unaffordable. But it’s just not true,” she explains. “There are bargains out there, especially with the soft market. And the market is soft. One risk came over my desk last week that had been in the excess-surplus market last year. Seeing that made me jump out of my chair. So there are products out there that are affordable, and it’s up to the agent to inform clients about them. If not, that agent could have an E&O problem to deal with. We try to keep our agents abreast of what’s going on in the market. We put out newsletters and e-blasts from time to time to keep them informed.”
Steve Hargreaves, of the Bozeman, Montana-based ERIC Companies, also works with Freberg when environmental insurance issues arise. “We place real estate insurance coverages,” he says, “and occasionally parties in a real estate deal will come to us if things get jammed up because of a pollution exposure. If we can solve that problem for that client, then he or she usually becomes a repeat client for us. We use Freberg when an environmental problem comes up that can’t be handled by an off-the-shelf policy. They’re wonderful about customizing a package for our clients.”
For more information:
Freberg Environmental Insurance
Web site: www.feiinsurance.com