During the past eight years, the number of insurance carriers that provide coverage for environmental contractors and consultants has grown from about five to over thirty. The result for companies in the industry has been lower insurance premiums, easier access to coverage, and low deductibles.
Many insurance experts believe that the era of low rates is about to change. The cost of insurance, which in the insurance industry is called rate, fluctuates up and down based on many factors. These fluctuations are called hard and soft cycles or markets.
A hard market occurs when carriers reduce their appetite for writing insurance, either for specific industries such as environmental contractors or for certain characteristics of specific industries. Hard markets mean higher premiums as there is less ambition to write insurance from the carrier’s perspective and therefore less capacity and competition.
A soft market is the opposite and is what the IAQ and environmental industries have experienced over the last eight years. It occurs when carriers increase their desire to write insurance for different types of clients. Often this is done by lessening their standards. Soft markets mean a lower premium as there is a greater desire to write insurance and therefore greater capacity and competition.
“Recent history has shown that the market is indeed beginning to change into a hard market, however, there are things IAQ and environmental consultants and contractors can do to minimize future insurance rate increases,” reported Brian Mcfarland, Vice President of Legends Environmental Insurance Services, a leading provider of insurance coverage to these industries. “Preparing for possible market changes takes an integrated insurance purchasing and risk management approach.”
Mr. Mcfarland gave the following tips:
Structuring Insurance Programs for Maximum Benefit: In a hardening market, some lines of coverage may simply no longer be cost-effective for a firm. Work with an insurance agent to determine which coverage has the most impact on a business and determine strategies for reducing risk for any coverage dropped.
What’s Important: Evaluatethe entire insurance experience. Certain carriers may be more competitive on price, yet fail to offer the same level of service or support. In addressing the total cost of risk, be sure to see the whole picture.
Increase Insurability: If an insured has dropped membership in the IAQA, or let certifications lapse, like those offered by ACAC, reconsider these actions. The insured actually receive credit for these types of credentials as carriers view these as risk reduction.
Legends Environmental Insurance Services is nationally recognized as an innovator in providing environmental and restoration insurance programs. The company has over 30 years experience providing these services in all 50 states.