Category: News

environmental Strategist, between the lines:  After more than three decades concentrating in environmental risk management / insurance, I am still amazed how many businesses do not understand the vast array of environmental exposures impacting their business model.

An emerging pollutant businesses need to be familiar with are PFAS chemicals.  There are over 4,000 PFAS chemicals and they are a “forever chemical”.  If you are not familiar with PFAS chemicals, you need to be so let me know and I will send you some information.  As an example of why PFAS is the next asbestos, to date, the State of Michigan has identified fewer than 200 PFAS contaminated sites in the State and experts believe that number is going to grow to 11,000 just in Michigan.

As the link below points out Johnson Controls is paying residents of the Town of Peshtigo, Wi. $17.5m for PFAS contamination of drinking water wells from the company’s firefighting foam training site.  The settlement covers a contamination plume of about three-square miles.

Environmental coaching strategy:  Working with a commercial insured, should they give you the old “we don’t have any environmental exposures in our business”.  The question to ask next is, who are your neighbors and what if a neighbor causes for contamination to come onto your property?  Pollution insurance policies can protect insureds if third parties contaminate their property.

I have found an effective way to get this point across is have the business pull up Google maps on their computer and type in their address.  Now have them scan out to a 2-mile radius (in a Phase I site assessment they do a minimum of a 2-mile radius search to see who neighbors are) from the subject property and ask them how comfortable they are that no one in the 2 mile radius could cause for contamination to come onto their property.  Oh, you are not comfortable, that would be a good reason to consider investing in pollution insurance.

https://wisconsinexaminer.com/brief/johnson-controls-to-pay-17-5m-to-town-of-peshtigo-residents-in-pfas-class-action-suit/

Natural Disaster Losses Jump 25% in 2020
•2020 Represent the fifth costliest year for covered insurance losses since 1970.
•Swiss Re cautioned that climate change was expected to exacerbate Natural Disasters
ERMI continues to coach how Natural Disaster Seasons (NDS, i.e. Flooding, Tornados, Forest Fires, Hurricanes, earthquakes…) are a great time to talk pollution. Most pollution policies do not exclude Acts of God (i.e., Natural Disasters).
During NDS, national and local media are lighting up the airways / internet highway with all the pollution problems caused by natural disasters.
Note: Pollution losses tend to be a severity versus frequency issue.
Note: Under Federal law, property owners are ultimately responsible for the environmental condition of their property regardless of who or what caused the contamination.
It may not be until years later when the real estate owner goes to sell their property and an environmental site assessment unveils an environmental problem from pollutants deposited during NDS. Who’s responsible?
As your team member for all things environmental, let ERMI know how we can assist you to drive your sales during NDS.
https://www.barrons.com/news/disaster-linked-losses-in-2020-hit-187-bn-swiss-re-01608031808?tesla=y

The article below talks about a fire that took place at a company that produces plastic products.  The fire started when a power line fell into a storage area containing plastic sheeting.

Below are a few environmental issues I want to strategize on related to fires.

• When plastics burn, they give off toxic fumes and it burns very hot, so in this situation, fire fighters needed to use PFAS containing foam to put out the fire. There are over 4,000 PFAS chemicals in use and every business has on their premises an array of products containing PFAS chemicals. As the fire is extinguished, PFAS chemicals will be released into the ground, surface & ground water, air and migrate over land to neighboring properties.  Every business owns a lot of plastic containing assets such as computers & monitors, waste baskets, packaging, totes, barrels, phones, copy machines & printers, furniture, shelving….
• After a fire, the resulting contamination from burning materials, firefighting foam needs to be cleaned up. Do the fire policies you sell offer enough or any coverage at all for pollution cleanup that results from a fire? You need to make sure your insureds have an environmental financial assurance plan in place to address their exposure to pollution liabilities as a result of a fire.  In addition to clean up, pollution liability policies cover insureds for defense costs, third party bodily injury, business income, property damage, reputational risk and much more.  Environmental insurance policies cost the insured fractions of a cent on the dollar versus 100 cents on the dollar out of their own pocket if they self-insure.  Or worse yet, your E&O insurance if you did not advise them as their professional risk manager on the need for an environmental financial assurance plan after a fire versus unknowingly self-insuring.
• For businesses that experience a fire, it can create a reputational risk / image restoration for the businesses, even if it was not their fault. Many environmental insurance carriers offer reputational risk costs in their pollution policies because they have seen firsthand the reputational damage on businesses as a result of a fire. Reputational risk / image restoration provides coverage for expenses incurred arising out of damages to the insured’s reputation or consumer confidence as a result of contamination that results in bodily injury, property damage, or remediation expense covered under the policy.

As the article points out, residents in the area reported they were concerned for their health from the contaminated smoke.  It was reported the smoke plume from the fire could be seen “throughout North Texas”.  Some of the most toxic chemicals and gasses found in smoke include hydrogen cyanide, phosgene, dioxins, furans, sulfur dioxide, PCBs, hydrochloric and sulfuric acid, and arsenic. Other toxins may include benzene, lead, chromium, and other metals, toluene, acrolein, mercury, formaldehyde, phenol, styrene and polycyclic aromatic hydrocarbons.

As you read the article you can see the dollar signs growing right to the end where they point out “The Texas Commission on Environmental Quality are continually checking air quality conditions and the state will provide any necessary resources”.  Who will be compensating Texas after they supply the “necessary resources”?  Cha-ching $$$, another cost environmental insurance policies can cover.

https://www.bakersfield.com/ap/national/firefighters-continue-to-battle-massive-industrial-blaze-in-texas-that-may-burn-for-days/article_e4931b17-e7d5-58c7-8be1-de10b1dd1001.html

COVID has drastically raised the number of virtual Environmental Play Book reviews we conduct with our retail agency partners.  Our partners are realizing the valuable electronic resource the Play Book is and how simple to customize their ERMI Play Book to meet their business model.

The ERMI Play Book is loaded with resources to assist you in growing not only your environmental insurance sales, but sales of all the insurance products your agency offers.  From commercial and personal lines P&C to life and health, the ERMI Environmental Play Book resources are proven to drive insurance sales.

New producers to the insurance industry should be laser focused on environmental.  Why?  Because fewer than 15% of licensed insurance professionals are actively working with pollution liability insurance, yet every insured you work with is impacted by environmental exposures.

ERMI Play Book Sales Strategy #1:  Prospect for new business, 90 days after renewal.  We all know what’s going on 90 days before renewal.  90 days after renewal, the smoke has settled and when you call a prospect and say you would like to discuss the environmental exposures impacting their business, their first response is, “We are not impacted by environmental exposures.” What!!!

The ERMI Play Book contains a resource to address this response, the ERMI environmental Risk Assessments (eRA).  Our partner agencies find utilizing the eRA’s is an excellent way to leverage their insurance sales through educating the client about the fiscal realities of pollution protection.  For those in the know, it genuinely does have a measurable impact to their bottom line and strategic financial planning.

So, you email the appropriate eRA (see list below) to the prospect that is “not impacted by environmental exposures” and follow up with a phone call in a week.  The prospect responds, after reading the eRA, they now realize there are several environmental issues impacting their operations.  They go on to say they would like to further discuss how investing in pollution liability insurance will add value to their business model.

You meet with the insured and through the course of the meeting, they ask you if you would take over their whole insurance program because you brought more value to the table than their current agent.

Environmental Risk Assessments (eRA)

Environmental Risk Managers (ERMI) success in the environmental insurance niche has been the integration of environmental education and risk management.  An environmentally educated insured can make an informed decision if investing in pollution insurance will add value to their business model.

One such educational resource we developed are environmental Risk Assessments (eRA).

We send our eRA’s in a Word format, so you can cut and paste them into a marketing presentation that compliments your agencies marketing program.

The eRA’s come in three parts:

1. Review of environmental exposure impacting your insured.
2. Environmental loss examples
3. Environmental insurance coverage’s that are appropriate for the insured to consider.

The goal is to educate your insured, so they can make the best decisions for their business. If your insured sees value and elects to further pursue environmental insurance coverage, we’re here to make your job easier by utilizing our network and expertise to market your client’s submission and supply you with the best environmental insurance coverage options.

Below is a list of the eRA’s we have developed.  Call or email me on which eRA’s you would like to add to your ERMI Environmental Play Book.  Don’t have your ERMI Play Book, let me know and we will get you a copy.

List of eRA’s:

Agriculture:  •Botanical Gardens  •Commercial Farming  •Dairy Cattle  •Fruit Farmers  •Livestock Operations  •Vineyards

Auto & Marine:  •Auto Servicing & Repair  •Auto Dealers / Service Garages  •Auto Salvage Yards  •Convenience Stores / Gas Stations  •Marinas / Ship Yards  •Marinas  •Ports  •Tire Sales & Service

Aviation:  •Aviation Industry

Contractors:  •Aggregate Crushing & Project Waste Management  • Asphalt Paving  •Commercial •Commercial Janitorial Contractors  •Concrete / Masonry  •Concrete Additive •Contractors Operations Facilities  •Contractors Pollution & Professional  •Demolition  •Directional Drilling  •Drilling  •Drywall  •Electrical  •Environmental  •Excavation  •Fire Suppression  •Flooring  •Glass  •Highway Construction  •HVAC  •Landscapers  •Logging  •Painting  •Plumbing  •Pressure Cleaning  •Remediation  •Residential  •Roofing  •Septic Service Providers  •Sewer Cleaning  •UST / AST Contractors

Disposal / Recycling:  •Plastic Recyclers  •Scrap Metal

Financial Institution:  •Financial Institutions

Food & Beverage:  •Beverage Distributors  •Dairy Distributors  •Distilleries  •Food Distributors  •Food Processors  •Restaurants

Hospitality:  •Golf & Ski Resorts  •Golf Courses  •Hotels & Resorts  •Hunting & Fishing Clubs  •Ski Resorts

Manufacturing:  •Manufacturers  •Pallet Manufacturers / Distributors  •Plastic Manufacturers  •Sheet Metal Fabrication  •Tool & Die Shops

Medical Facilities:  •Hospitals  •Medical Offices  •Pharmaceutical Companies  •Senior Living Facilities

Mining & Cement:  •Concrete Suppliers  •Quarries

Public Entities:  •Municipalities  •Waste Water Treatment Plants

Real Estate:  •Real estate Owners & Developers  •Pollution Insurance Manual for Condo and Apartment Owners

Trucking:  •Trucking Companies

The link below will take you to an article published by the IIABA where I strategize on the growth in the environmental insurance industry has created a problem for insurance carriers being able to hire knowledgeable and experienced underwriters.  And that is causing a problem for retail agents that work directly with carriers.

ERMI has witnessed plenty of cases where retail insurance agents working directly with inexperienced underwriters, are not negotiating proper coverage and endorsements.  This means an increased E&O exposure for the retail agent.

The growth in the environmental insurance industry has placed greater emphasis on making sure insurance agents are working with knowledgeable and experienced specialty wholesalers like ERMI.  By teaming up with ERMI you are assured the broadest marketing efforts, allowing you to deliver the best coverage at a competitive premium.

Other issues ERMI has witnessed when insurance agents work directly with carriers.

1. This has happened with various carriers over the years, but for example, a few years ago, AIG decided to re-evaluate their environmental book of business which meant they were non-renewing a substantial amount of policies.  This left many agents with no alternative markets, which meant ERMI saw a nice increase in new business submissions.  In remarketing the AIG renewals with alternative carriers, ERMI was beating expiring AIG premiums by an average of 35% and adding coverage enhancements.
2. As insurance carriers enter and exit the marketplace, a specialty wholesaler will have relationships with a variety of environmental insurance carriers so they can effortlessly move insureds and make sure they are with the appropriate carrier/s.
3. As the market begins to harden, what ERMI experienced in the last hard market cycle were carriers either exiting the market or restricting coverages.  A wholesaler will be able to search markets to make sure you are with the proper carrier at a competitive premium for the market conditions.
4. If you are not working in the environmental space daily, as emerging contaminants (PFAS, Surfactants, Glyphosate, Silica, Legionella…) continue to surface, an environmental wholesaler will coach you on assisting your impacted insureds.  See attached ERMI Environmental Play Book.

https://www.iamagazine.com/markets/read/2020/01/27/why-experience-is-crucial-in-environmental-liability-insurance

Last year we shared competitive environmental intelligence on a crematory contaminated with radiation from cremating human remains of cancer patients (https://www.kctv5.com/news/cancer-patient-s-treatment-leaves-radiation-contamination-in-arizona-crematory/article_23c6ee93-9fdd-54ed-a6c7-a334c0aec863.html).  The link below explores the exposure of radiological / nuclear contamination and failure of septic systems used by cancer patients.

The link below examines what coverage would protect property owners, businesses, neighbors from radiological and nuclear contamination caused by cancer patients?  Coverage would be excluded under Standard P&C policies so a pollution policy can protect not only the cancer patients and businesses that serve them but all those in the radiological / nuclear supply chain i.e. production, shipment, storage, implementing medical procedures, caring / serving cancer patients…., tens of thousands of businesses are involved.

In the United States in 2006 (most recent year for data) about 377 million diagnostic and interventional radiological examinations and 18 million nuclear medicine examinations were performed, and that number has grown exponentially since 2006 due to all the new radiological and nuclear medicines.

Work with your insureds that have exposure to radiological / nuclear contamination and put into place an environmental financial assurance plan to protect their business.  Keep in mind pollution liabilities tend to be a severity versus frequency issue.

https://www.propertycasualty360.com/2019/11/13/chemo-drugs-and-septic-tanks-pollution-or-covered-loss/?kw=Chemo%20drugs%20and%20septic%20tanks:%20Pollution%20or%20covered%20loss?&utm_source=email&utm_medium=enl&utm_campaign=dailynews&utm_content=20191113&utm_term=pc360&enlcmp=nltrplt2

environmental Strategist, between the lines:  As the article below points out there has been an eight-fold increase in the number of Legionnaires cases over the last two decades.  The hotbeds for Legionnaires are hot tubs, hotels, hospitals.  The “experts” point to several factors for the explosion of cases in the US, i.e. decaying infrastructure, an aging population, green buildings, water conservation efforts, climate change and increased testing.

Legionnaires Disease is a bacteria that can create an environmental liability for those using central air conditioning systems, fountains, room-air humidifiers, ice-making machines,  whirlpool spas, water heating tanks & systems, showers, swimming pools, misting systems typically found in grocery-store produce sections, cooling towers used in industrial cooling systems, evaporative coolers, nebulizers, humidifiers, windshield washers, physical therapy equipment….

The article discusses that dealing with Legionnaires can be very expensive and it’s anticipated the number of Legionnaires cases will continue to grow.

Besides property owners experiencing expensive cleanups, business interruption, third party bodily injury, third party property damage, reputational damage…, who else gets named in Legionnaire lawsuits?  Vendors who can impact water such as plumbers, HVAC contractors, Refrigeration contractors….

As your client’s professional risk manager, you need to make sure clients have an environmental financial assurance plan to address their exposure to Legionnaires.

Pollution insurance can protect your insureds from Legionnaires liabilities.   

https://www.chicagotribune.com/lifestyles/health/sc-hlth-legionnaires-1113-20191108-fkgvdm2nnratfe2uuxavmsasqe-story.html

We have strategized how Legionnaires occurrences experienced a five fold increase from 2000 to 2017.  Sometimes it can be tricky for me to understand what this means.  I was reading the web links below that offer articles related to recent Legionnaires occurrences, pay attention to the dates.

Headlines:

10-21-19:  DC Psychiatric Hospital Goes Weeks Without Drinking Water

10-18-19: 4^th Legionnaires Disease Death Reported In North Carolina From Hot Tub Display

10-10-19:  Michigan Probes Detroit Area Hospitals 7 Legionnaires Cases

10-4-19:  NW Indiana Schools Closed After Legionnaires Discovery

9-15-19:  2 New Cases of Legionnaires in Suburban Chicago

8-18-19: Officials Probe Respiratory Illness At Quincy Veterans Home

8-15-19:  Source Confirmed In Legionnaires Outbreak At Atlanta Hotel

8-14-19:  Maine CDC:  Legionella Bacteria Eliminated From Water Source

8-1-19:  Hotel In Schaumburg, Illinois

8-1-19:  Hotel In Tomahawk Wisconsin

7-15-19:  Three Employees in La Porte County Indiana

7-1-19:  Nursing Home in Connecticut

Question:  How many Legionnaires cases were not reported or known about?

Who has exposure to Legionella?  Legionnaires Disease is a bacteria that can create an environmental liability for those using central air conditioning systems, fountains, room-air humidifiers, ice-making machines,  whirlpool spas, water heating tanks & systems, showers, swimming pools, misting systems typically found in grocery-store produce sections, cooling towers used in industrial cooling systems, evaporative coolers, nebulizers, humidifiers, windshield washers, physical therapy equipment….

Question:  Should you be strategizing on managing and transferring Legionnaires exposures with your insured’s?  Environmental Risk Managers is here to team up and assist.

Links to Legionnaires articles:

https://www.apnews.com/Legionnairesdisease

https://hcinfo.com/about/outbreaks/recent/

Fact:  Pollution liabilities are a severity, versus frequency issue, that can have a catastrophic impact on HNW insureds.

Fact:  Many of today’s HNW insureds have outgrown their personal & commercial insurance policies coverage capabilities.

Fact:  Pollution liabilities are a great example of how one’s affluence can out pace their insurance policies.

Today’s HNW insured’s need coverage that goes beyond their personal & commercial insurance policies.

Question:  Will the personal and commercial insurance policies you have in force cover your HNW insured’s cover for the following loss examples?

The ERMI HNW Pollution Program can cover for the following loss examples.

Environmental Loss Examples

1. A HNW insured purchased a piece of property to build a residence.  During excavation, oily smelling soil was encountered.  Investigation revealed the source of the contamination was an old unknown dump site on a former farm, now part of an affluent residential community.  The HNW insured paid $150,000 to clean up their property and their attorneys were investigating possible restitution options.
2. Environmental exposures created by motor craft (car, boat, Plane) restoration.  A car collector had a private garage where he restored and stored his car collection.  To fuel the vehicles there was a 1,000 gallon above ground storage tank.  While moving a vehicle the above ground tank was accidentally hit spilling it contents.  The fuel ran off the asphalt into the ground and a nearby creek.  Cost for remediation and natural resource damages was $250,000.
3. It was never determined how a yacht at a marina caught on fire. Because of the fire, neighboring boats also caught on fire.  Fire departments responded to the fires and after the fires were put out the resulting environmental damage cost the yacht owner more than $2,000,000 in fines, penalties, cleanup, business interruption….
4. A condominium was being renovated.  Tenants in the building complained about exposure to dust and other airborne toxins.  Tenants filed suit against the condominium owner and contractor for bodily injury from airborne contaminants entering the ventilation system.
5. Some residents in an upscale residential development were getting sick. After extensive investigation, it was discovered a chemical release from a nearby former dry-cleaning business were migrating via vapor intrusion into residences.
6. A condominium complex with an underground parking garage was in the path of a hurricane.  As a result of the heavy rains, the lower level of the parking garage was flooded.  The flooding caused backup of sewage as well as gasoline and other automotive fluids released from the vehicles in the garage.  Cleanup was required by property owners.
7. New construction was taking place on a previously undeveloped parcel of land. During excavation, contaminated soil was discovered.  The owner had to remediate the site before construction could continue.  It was later discovered the contamination had migrated onto the property from a former boat yard property that had been torn down and out of business for decades.  Remediation costs exceeded $500,000 for the property owner.
8. Several owners in a private residential community were experiencing health issues. During investigation it was discovered that some utilities in the houses such as electrical connections were corroding and could potentially cause a fire.  Testing revealed the dry wall contained contaminates not found in dry wall.  The manufacturer of the dry wall was a Chinese business.  Multiple lawsuits have been filed for multi-million dollar claims for bodily injury, property damage, diminution in property values and more.
9. After moving into their new home residents became ill. Testing revealed several flooring materials contained alarmingly high concentrations for formaldehyde.  Flooring had to be replaced but since the contractor did not have the proper pollution coverage the homeowner had to pay for the replacement and was suing their general and subcontractor for replacement costs along with bodily injury, property damages and extra expense for delays in construction.
10. Due to an unusually strong windstorm, waves broke through a retaining wall at several waterfront residences. Sediment blocked the canal and caused natural resource damages to a wetland.  Cost for restoration and cleanup exceeded $300,000.
11. A drilling contractor caused a release of raw sewage into both soil and ground water after failing to identify a sewer line before drilling. The clean up entailed the excavation of several tons of impacted soil and impacted other residential neighbors when their basements filled with sewage.
12. A real estate limited partnership acquired property previously used for farming on which they planned to build a mall. The firm hired an environmental consultant to conduct a Phase I Environmental Assessment. The property was determined to be “clean.” However, when excavation for the mall began, 100 drums of buried pesticides and herbicides were unearthed. The chemicals contaminated the soil and had to be removed at the firm’s expense. Remediation and drum disposal costs exceeded $750,000.

Fact:  If you have not developed an environmental financial assurance plan for your HNW insureds, your E&O coverage may be the only coverage your HNW insured has when they experience an environmental liability.

A recent study update conducted by the Environmental Working Group shows Michigan having the most “known” PFAS sites (192) and second place is not even close with 47 “known” contamination sites in California.  The key word is “known”.

Just as PFAS chemical use is everywhere, so too are PFAS contaminated sites.  As we have learned with Superfund sites, new PFAS contaminated sites are going to continue surfacing.  Early guesstimates are Michigan can have upwards of 11,000 PFAS contaminated sites.

For a little background on PFAS:  PFAS chemicals are used for their resistance to heat, water, oil and grease.  PFAS are a group of human-made chemicals that includes PFOA, PFOS, GenX, and many other chemicals. PFAS have been manufactured and used in a variety of industries around the globe, including in the United States since the 1940s and contaminate soil, ground water, surface water and the air.  PFAS can resist degradation in the environment and bio-accumulate; meaning that they are persistent in the environment and tend to concentrate in blood and organs over time in biological species.  People can be exposed to these chemicals in house dust, indoor and outdoor air, food, and drinking water. Exposure to certain PFAS chemicals has ties to cancer, ulcerative colitis in adults and thyroid disease in children, among other health problems.

Since PFAS contamination can create large plumes of contamination, this solicits 2 questions when analyzing a business’s environmental exposures.

1. “Who Are Your Neighbors”? When they do a Phase I Site Assessment, they do a minimum of a 2-mile radius search to find out who your neighbors are, and do they have known contamination that can be coming onto your property.  What we have learned from known PFAS contamination sites, is contamination can go way beyond a 2-mile radius.
2. What is your Environmental Financial Assurance Strategy (EFAS) to protect you from your neighbors PFAS contamination coming onto your property? Environmental liability insurance as part of an EFAS, can protect you from neighboring PFAS.

For more information on EFAS for PFAS contact:

Chris Bunbury:  chris@ermi.us    Brooks Bunbury:  brooks@ermi.us

https://www.clickondetroit.com/michigan-water/michigan-has-most-pfas-contaminated-sites-in-us-what-you-need-to-know

https://www.freep.com/in-depth/news/local/michigan/2019/04/25/pfas-contamination-michigan-crisis/3365301002/