10 best practices for pollution insurance submissions

Much like resumes in an HR department, well-prepared pollution insurance submissions get more attention. A quality submission can result in a better experience, increased placement efficiency, better coverage certainty, fewer claims disputes. This is in addition to overall better outcomes for customers, brokers, and insurers.

How can a business and its broker make sure their pollution insurance submission rises to the top and is responded to in a timely manner? The answer is effective planning and collaboration.

Pollution underwriters only bind about 10% of what comes in the door. So, they need to carefully triage good quality submissions within their underwriting appetites. Not every environmental insurer has an experienced in-house engineering staff to help sort out and analyze key documents, nor are many willing to incur outside engineering expenses when there is so much uncertainty in binding a policy.

Insurance brokers are time-challenged, too. For site pollution insurance, brokers often face the task of compiling and transferring large volumes of historical data and trying to address obvious data gaps with prospective clients.

Poor quality submissions often create inefficiencies, frustration and waste a lot of everyone’s time. Fortunately, there are some basic submission attributes and best practices that clients and brokers can routinely employ to elevate the quality of any pollution insurance submission.

1. Create a solid relationship

Developing solid working relationships between brokers and specific underwriters is a critical first step. Clients and brokers can establish trust by being honest and clear about what information and answers are not readily available. Repeat placement success is also important in a broker-underwriter relationship, helping reinforce the best process steps for obtaining a bindable, competitive quote.

2. Know your customer & do your homework

Brokers should understand and be able to explain to an underwriter why the client is interested in buying again or moving to a new carrier. What is the story behind the prospective client’s coverage request and the need-behind-the-need? Are customers demanding multiple quotes from different carriers? Are they focused on price, coverage, service or all of the above? If the client is serious, then it’s time to get serious about spending an appropriate amount of time creating a quality submission.

Understanding these factors is a critical first step in the underwriting opportunity assessment process, so it is important to be able to expand on these drivers.

3. Focus on good business

Customers with a long loss history, poor risk management program or a high potential for future large losses are not tantalizing for carriers who are currently subject to ever-increasing competition and profitability challenges.

Can you make a case for why an insurance company should want the business or consider providing broad coverage? Can you make a case for why a new carrier should expect the account to be profitable, particularly when their prior carrier is non-renewing? Can the business seeking coverage offer mitigating factors that make them a more attractive partnership?

The days of environmental carriers binding any risk crossing their desk just to achieve top-line revenue goals are long gone — just like the environmental insurance companies that did not exercise disciplined underwriting practices.

4. Educate clients

Brokers need to be prepared to discuss environmental exposures, how the policy responds to claims and the coverage availability in the broader marketplace.

Education may also be needed on the mechanics of the submission and underwriting process, evaluation of quotes and post-binding service level that can be expected from underwriting, risk consulting and claims staff once the relationship is consummated.

Clients should be aware of the implications of nondisclosure of key information in the event of a claim and brokers should realize the risk of errors and omissions. For environmental insurance carriers, providing a focused submission avoids superfluous information that can typically result in excessive engineering and underwriting time.

5. Set realistic expectations

Based on a client’s risks and business model, brokers can play a big role in helping clients understand the extent of coverage that can realistically be expected from the pollution insurance marketplace. Requesting realistic coverage options based on both known and undefined exposures won’t slow down the underwriting process. Some coverage, especially given current market conditions, may very likely not be available based on a company’s environmental and safety history.

6. Get an early start

Starting to collect and prepare submission information well before placement is advantageous. Many brokers will ask a prospective client to complete a carrier application or, better yet, work on it together. This initial collaboration provides a good idea of supplemental submission information that may be required. Brokers have an important job to do once quotes hit their desks, and it takes time to develop a path forward and/or recommendations for their clients.

7. Provide comprehensive submission guidance

Brokers can provide valuable guidance by, early on, providing a list of information needed from prospective clients. A comprehensive request can help the customer develop a plan for compiling data in a timely and efficient manner. Information to consider in the request may include:

• A copy of the purchase and sale agreement if this is a real estate transaction or stock purchase.
• Phase I Environmental Site Assessments (ESAs) that identify recognized environmental conditions (RECs) or provide other findings/recommendations.
• Phase II ESAs, site remediation reports or follow-up documentation for those sites with issues so the underwriter can understand how they were addressed/closed.

It’s important to ensure that prospective clients understand full disclosure is not only a legal obligation but necessary for underwriters to consider the broadest coverage available.

8. Provide quality documentation

A high-quality submission also includes supplemental documentation, like financials and loss runs, that directly supports the questions and information requested on the application. Underwriters may request additional information upfront based on the class of business or specific company risk profile. Brokers and clients need to clearly identify what data gaps exist for the underwriter and offer potential solutions on how to overcome missing information.

9. Follow-up with the underwriter

It’s not uncommon for brokers to reach out to environmental insurance underwriters to help them better understand the account opportunity and technical aspects of the risk and get them excited about providing a quote and the potential for winning the business. Plus, preliminary underwriting feedback can help brokers reset prospective clients’ expectations and explain progress in the underwriting process.

10. Initiate client/carrier meetings

Short conference calls and virtual meetings can be a great way to provide additional insight into a prospective client’s exposures and coverage needs. Contact with the client can add immediate value.

Final thoughts

The value of a quality, timely, comprehensive insurance submission package cannot be underestimated, especially when looking for quality environmental insurance protection. Admittedly, this can be a challenge, especially with everyone’s time constraints.

A good pollution liability insurance submission should speak for itself and be able to demonstrate why it should be a priority. And taking the time to get it right can reap big benefits.

Gregg Shields is vice president, risk consulting – Environmental for AXA XL. He has 35 years of environmental experience in research, industry, consulting and insurance and currently leads a multi-disciplinary team providing risk analysis and risk management solutions for AXA XL’s Americas Environmental customers.

Opinions expressed here are the author’s own.

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