What’s happening in the environmental insurance market today?
Understanding where any market stands and how it’s continuing to evolve requires enlisting specialist expertise able to pinpoint what’s changing and the implications of those changes. Stepping up to the mark for the environmental sector, Cristian Altobelli, environmental underwriter at Markel Canada spoke with Insurance Business to discuss recent catalysts of environmental coverages, financial fines and penalties derived from environmental exposures – and how Markel’s environmental team earns the trust of its broker partners.
Looking at how the contracting industry, particularly, has been impacted by new environmental exposures, Altobelli highlighted that he has seen a confluence of contractually obligated catalysts, as well as an increasing focus on environmental risk management practices. This, in turn, he said, has prompted more contractors to carry standalone environmental coverage.
Find out more: Find out more about Markel’s environmental insurance solutions today
“On the contractually obligated side,” he said, “with the Canadian Construction Document Committee (CCDC) release of the CCDC 41 insurance requirements towards the end of 2020, we’ve seen increasingly more contractors opt to carry contractor’s pollution liability coverage to satisfy the potential contract requirement they have/may encounter.
“When confronted with this requirement, some brokers have also used it as an opportunity to have their client commit to a practice/annual contractor’s pollution liability policy with this being a potential cost-saving measure as opposed to carrying multiple-project policies where possible.”
During this process, since the coverage is now being more sought after, it leads to more detailed conversations. Critically, he said, this also leads to a rationalization from applicants/risk managers of the need to reassess their environmental/pollution exposures as a whole to address gaps in coverage they previously thought did not warrant the price of coverage.
“Moving into both the future, I would also predict we see the contracting industry focus on the advent and genesis of renewable energy technologies and the unique exposures they bring,” Altobelli added. “As the desire/demand for renewable energy sources grows, it can be reasonably expected that government-incentivized projects around this space will continue to be built.
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“With the potential renewable project types varying in size, scope and complexity they will present challenges and opportunities to both the brokers and underwriters who can identify exposures while also providing the bespoke coverage offering to ensure the applicant has the peace of mind to pursue their project.”
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Offering examples of some claims areas that are worth keeping an eye on, Altobelli noted that one type of claim he expects to see increasing as the impact of climate change continues to manifest involves stormwater and runoff discharges from construction projects. As we increasingly develop various areas of society and infrastructure ramps up, he said, we will increasingly lose natural green spaces to absorb excess rainfall.
So, when potential rainfall events occur, this could lead to inadequate or underestimated erosion/sediment controls and stabilization measures leading to rainfall pooling at a job-site. This could then pick up any potential chemicals, liquids or materials and transport them to a third-party location and/or sewer systems and nearby sensitive ecological receptors.
“I’d expect to see increasing indoor air quality/microbial matter related claims as the impact from climate change creates an environment which may lead to the increased proliferation of mould growth or, excess rainfall events leading to water entering more facilities where it historically hasn’t thereby creating an environment for mould to grow,” he said.
As the Canadian environmental legal and regulatory landscape continues to evolve, Altobelli stated that he would expect to see increasing attention and quantification of ecosystem services (which can be understood as the direct and indirect services provided by the natural environment). This will provide a cost-basis to more reliably quantify the impact a discharge of contaminants can have.
“All to say, I would foresee environmental fines and penalties to continue to be prevalent when understanding an applicant’s exposure,” he said. “For those interested, Ontario publishes an annual Environmental penalty report (https://data.ontario.ca/dataset/environmental-penalty-annual-report) and similarly the Government of Canada publishes an Environmental Offenders Registry List (https://data.ontario.ca/dataset/environmental-penalty-annual-report). Both of these sources provide context on what various entities can do during the course of their operations and the financial penalties associated with their action/lack of action.”
For Markel, creating a value proposition that sets it apart from the wider market is a combination of several critical factors – including having an exceptional team and a differentiated service offering.
Over the last five years, Markel’s Environmental Impairment Liability (EIL) team have undergone a transformation which Altobelli firmly believes has brought its offering level to several leading markets – both in terms of its product suite and its coast-to-coast coverage in Canada, which includes multiple bilingual team members able to service both English and French-speaking requirements.
“In terms of differentiation, I am of the mindset that the Markel EIL team’s greatest value-add is being empowered when it matters,” he said. “Whether it is a last-minute coverage request, the ability to produce a manuscript or highly bespoke amendments to policies, or providing alternative terms when a broker’s incumbent market has not met expectations, our ability to promptly engage with our partners shines through during these moments.
“This ability to be flexible in a time of need and position our partners in the best position to succeed helps reiterate Markel’s commitment to mutually advantageous relationships which reduces unnecessary inertia in any given insurance transaction. The emphasis we place on honesty and transparency is a key factor present in Markel’s environmental team dealings.”
Critical to Markel’s offering is its focus on its broker partnerships, Altobelli said, and when provided with the opportunity to review a risk by its brokers, the team will aim to respond quickly – not subjecting brokers to a ‘slow no’ response. It is because of this approach that Markel has earned, and will continue to earn, the confidence of its broker partners who trust the company with their business and – as an extension of that – part of their relationship with a client.
“The emphasis on empowerment in underwriting and honesty in our dealings allows us to service our broker partners in the most effective way we can making access to a Markel environmental underwriter,” he said, “representing a true competitive advantage.”
Find out more about Markel’s environmental insurance solutions today
Cristian Altobelli joined Markel Canada as an associate underwriter, environmental in 2019. He was promoted to underwriter, environmental at Markel Canada in 2020 and named one of Insurance Business’s Rising Stars in 2022.
