When Chris Bunbury got started in environmental insurance back in the 1980s, there were two carriers, minimum premiums were $60,000 and if a business wanted a quote, they had to pay a $10,000 nonrefundable fee just to find out if they qualified.

Fast forward to today, and the market is practically unrecognizable: More than 40 carriers are vying for the business, minimum premiums start as low as a couple hundred dollars and coverages have broadened tremendously.

The point, says Bunbury, who is now president & CEO of Environmental Risk Managers, Inc., is that considering how common environmental exposures really are, no business has a good excuse to avoid purchasing the coverage.

David Dybdahl, president of ARMR.net and a wholesale insurance broker who has devoted his entire career to the environmental insurance sector, estimates that among independent agency customers, market penetration for environmental insurance is less than 10%.

“Once we educate insureds, one of the things we say to them is, ‘Now that you understand the environmental exposures impacting your operations, there’s a very simple question you need to answer: Based upon your business model, does it make more fiscal sense for you to transfer your environmental exposures for fractions of a cent on a dollar, or wait until an environmental loss occurs and spend 100 cents on the dollar out of your own pocket for legal fees, cleanup, third-party bodily injury and reputational harm?’” Bunbury points out.

If you’re trying to push environmental insurance to standard commercial clients, here are a few useful sales strategies to keep in mind.

1) Explain that their GL isn’t enough. In these types of scenarios, if your prospects argue they’re protected by their general liability policies, they’re dangerously wrong. Beware catch-all pollution exclusions, which render many GL policies completely useless in the event of a claim that involves anything from mold, bacteria and fungus to contaminated sandwiches.

“It’s really important for a retail broker to understand what pollution coverage or not exists in their GL policy,” warns Matt O’Malley, president of North America environmental insurance services at XL Catlin. “What we typically see is that the total pollution exclusion is added to many classes of business.”

Dybdahl, who teaches agent classes about pollution exclusions, often asks his attendees how many of them believe pollution exclusions are limited to hazardous waste. “Half the room will raise their hands,” he says. “And that’s not where most of the claims come from.”

“People are always thinking a pollutant is some hazardous nasty chemical thing, but we have examples where fresh water has been classified as a pollutant, cheese, milk, fruit juice, beer,” Bunbury agrees. “A pollutant is, very simply, something that ends up where it doesn’t belong.”

For example, “what many agents will do is they’ll certify contractors pollution liability insurance, based upon a job site pollution extension in the GL,” Dybdahl explains. “That is a common error. If somebody’s asking for real contractors pollution liability insurance, that GL policy cannot fulfill that insurance requirement. They need a separate policy.”

And exclusions for mold, bacteria and fungus can render many common water losses excluded as pollution claims, Dybdahl adds. “If a backed-up toilet is a pollution loss, then every condo and apartment needs an environmental insurance policy,” he says.

For a leading environmental insurance solution, log in to Big “I” Markets and search “environmental.” For additional information about how easy it is to misunderstand pollution exclusions, check out IA’s past articles on the topic, including “What Do Sandwiches and Water Have in Common? Both Can Eliminate Coverage,” “How Much Do You Know about Pollution Exclusions?” and “Pollution Exclusions Hit the Family Farm.”

2) Ask about their neighbors. Last week in “Like Cyber, Almost Every Business Needs Environmental Insurance”, IA addressed the fact that under federal law, all property owners are ultimately responsible for the condition of their property—regardless of who causes contamination.

In the event of a Phase 1 site assessment on a piece of property, a minimum two-mile radius search is conducted to determine if any neighbors have contamination that could migrate onto the subject’s property. That’s why in prospecting meetings, Bunbury encourages agents to pull up the prospect’s address on Google Maps and scan two miles out: “Ask them how comfortable they feel inside of that radius, that there’s nobody there that could cause an environmental problem that may have an impact on them.”

Another excellent prospecting tool, Bunbury says, is the Environmental Protection Agency’s Enforcement and Compliance History Online (ECHO) website, which allows visitors to type in any address and view a list of all nearby businesses that have ever had or are currently facing cleanups, fines or penalties.

“When you meet with somebody and they say, ‘We don’t have any environmental exposures,’ you can say you understand that, but you went to the ECHO website and found that this neighbor has had this environmental problem,” Bunbury suggests.

3) Get off the X date. When prospecting new business, most agents start 90 days prior to renewal. But when you’re prospecting environmental, Bunbury suggests changing tacks to stand out from the crowd: Start prospecting 90 days after renewal, not before.

“We all know what’s going on 90 days before renewal—their phone’s ringing off the hook,” Bunbury explains. “But 90 days after, the smoke has settled, so you can call and say you’d like to come out and talk about the environmental exposures impacting their operations.”

The business owner will probably say they don’t think they have any. Tell them you’d like to email them some resources. Environmental Risk Managers, for example, offers environmental risk assessments for about 50 different classes of business, which it sends to agents in a Word format so they can cut and paste them into a presentation specific to their agency.

Bunbury says the risk assessments are broken down into three sections: potential environmental exposures for the prospect’s particular class of business, environmental loss examples for that class of business and a brief overview of the pollution liability insurance products that could be appropriate.

“So now the business owner says, ‘Wow, several of these things impact us—we should probably talk,’” Bunbury says. “So you sit down and talk, and they say they need to talk internally and get back to you. After all this back and forth, they decide they want to invest in a pollution liability insurance product, and guess what—all of a sudden it’s 90 days before renewal of their standard p-c. While their phone’s ringing off the hook, they say, ‘Hey, you’ve been helping us with our pollution insurance needs—do you do standard p-c coverages too?’”

In that way, environmental can open up the door to sell all the other products in which your agency excels, Bunbury says: “Our research shows that fewer than 15% of licensed insurance professionals are actively out selling pollution insurance, and yet every business has an exposure.”

Ultimately, “nobody wants to be sold anything,” Bunbury says. “If you’re trying to sell pollution insurance, you’re trying to push water uphill. If you’re educating people on their environmental exposures, that’s the real secret.”

Jacquelyn Connelly is IA senior editor.