Small risks can have large environmental exposures

Rough Notes, Jul 2002 by Strazewski, Len

Nielsen says that hazardous waste transports and environmental consultants and contractors pose some of the biggest and most complicated liability risks. To simplify the coverage process for these clients, FEI has published two manuals with accompanying CD-ROMs that are designed to help agents and clients work with some of the more sophisticated environmental exposures.

Recognizing & Managing Carrier Security: A Handbook for Hazardous Waste Transports, published late last year, outlines a comprehensive security system for waste haulers, beginning with personnel security and employee screening and through route and site security. The manual also provides checklists that carriers can use to list commodity chemicals and rank their relative hazards.

Understanding & Managing Risk: A Handbook for Environmental Consultants and Contractors, published in 2000, is a comprehensive business manual for consultants and contractors that outlines marketing guidelines, proposal preparation, subcontracting and other business activities that could increase professional liability. The manual also provides tips on maintaining health and safety and includes sample forms and questionnaires.

FEI also maintains a library of policy forms, a technical glossary and other useful information for agents on its Web site (www.feiinsurance.com).

Nielsen says contractors pose some of the more complicated challenges for the firm and its loss control resources. Since contractors engage in a variety of interactions with their clients in a number of different environments, they have a broad potential for professional liability that can be reduced by effective risk management.

Nielsen also notes that the manuals not only answer many of the risk questions for clients, they also provide a marketing opportunity for agents and a chance for agents to provide some risk management value directly to the clients.

Hill agrees. Agents who can demonstrate some expertise in environmental risks can more effectively compete with larger brokers.

"Marsh, Aon and the large, national brokerage firms all have environmental consulting expertise as part of their risk management consulting operations and market their capabilities to large companies. If an agent can develop some experience in this area 'and take advantage of our expertise, they have a tremendous opportunity to compete at a higher level," he says.

Tom Stewart, president of Tom Stewart Insurance in Houston, Texas, has worked with FEI for more than five years to provide environmental coverages for its client companies with potential pollution risks. Though the agency has provided coverage for some small, site-specific risks, including companies with autoclave and incinerator operations, many of his clients are small transportation companies with auto liability needs and special biohazard exposures, including chemical spills, cleanup costs and pollution liability.

"It's not like dealing with a small, on-site environmental risk like a dry cleaner or a service station," he explains. "These businesses deal with hazardous cargoes that can change frequently and transportation routes that can carry them through highly populated areas. Coverage needs to be flexible and inconclusive because we are always dealing with the unexpected.