AIG wasn't alone in pioneering the field of environmental insurance. Also there at the beginning were players like XL, Ace and Zurich, among others.
XL's predecessor organization, ECS, was in the field beginning in 1979. ECS was first to respond to the demands of the Motor Carrier Act of the '80s that those who carried hazardous materials had to show financial responsibility.
Subsequently, general carriers tightened CGL exclusions against environmental coverage and the standard market pulled away.
"As that occurred, AIG and ECS, among others, began to provide a market," says Rich Corbett, president of the XL Environmental unit. "Today," he says, "it's mainstream for risks for all kinds of customers. There's a growing perception of need," he says, "and a vibrant insurance industry to provide it."
Karl Russek, Ace USA's senior vice president of environmental risk, has also watched the field evolve. "The big story in the environmental business in the last 10 years is its application well beyond the original focus on what were considered environmental risks, how the application of environmental coverages has expanded beyond the original niche market to touch virtually every industry out there," says Russek.
"I suspect environmental insurance will continue to gain acceptance in the broad insurance marketplace as a 'must have' coverage," says Russek. "I envision the environmental offerings becoming much more aligned and in some cases packaged with traditional casualty coverages."
Zurich entered the field in 1986, says Ken Berger, executive vice president, Zurich Environmental and Design.
"Clearly the trend since the '90s has been driven by regulation," he says. "You needed to have environmental insurance to get a permit to operate. Now people who purchase environmental services require their providers to have environmental insurance as contractors or consultants. There's been a move among corporate customers to address historical environmental liabilities. There's been a very active M&A market and environmental liabilities are one of the key stumbling blocks there. And there's been a robust real estate market and those transactions are enhanced by the insurance industry providing some certainty through environmental insurance."
In addition, he says, there is the cleanup of military bases and returning them to civilian uses.
April 1, 2005
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