Best's Review

AM BEST'S MONTHLY INSURANCE MAGAZINE



Issues & Answers Special Advertising Section:
 December 2021

Issues & Answers: Winning Environment

Jon Peeples, vice president of Environmental, Philadelphia Insurance Cos., said he sees the environmental insurance market going through a change related to climate change and the pandemic. “Because of COVID, the market started to tighten and rates increased, following in the footsteps of the casualty market,” he said. Following are excerpts from an interview.

Jon Peeples
Vice President of Environmental
Philadelphia Insurance Cos.

“When it comes to Environmental liability, PHLY has an experienced team that is easily accessible via any of our six offices located throughout the country.”


At a Glance

  • Key underwriting staff that averages more than 20 years of Environmental experience
  • Best’s Financial Strength Rating of A++ (Superior) and approved in 50 states
  • Knowledgeable and accessible underwriting team


What is the current state of the environmental market?

We’re going through some changes. Most of them are positive; some are curtailing the market, getting us toward a hardening market. Generally speaking, there’s still more capacity out there with more carriers becoming involved. We’re seeing the market continue to grow. However, claims trends and certain factors have impacted the market that we’re seeing a restriction in terms. Prices have gone up slightly but not nearly as much as the casualty marketplace. We’re seeing a tightening of the terms and conditions that the carriers are offering.

What environmental liability claim trends are you noticing?

We’re seeing an increase in claims associated with some of the recent disasters from storms and fires. Where we’re seeing increases in claims has to do with flooding, and they’re having an impact on buildings. Traditionally, Environmental’s coverage of flooding tends to be if a factory or industrial site is flooded—it will spread chemicals, similar to what happened in Houston a few years ago when the flood waters spread chemicals throughout the area. Now we’re seeing an increase in claims frequency with indoor issues, such as mold and Legionella being developed. Buildings such as apartment complexes, condos, and office buildings are getting hit with water and flooding, which is causing a high degree of moisture and they’re having large outbreaks of mold. The frequency of mold events and Legionella in the water systems of buildings is impacting our marketplace more so than traumatic events such as flooding at a factory or in an industrial location.

How is climate change impacting environmental liability?

We’re seeing an increase in frequency and severity of storm events. Conversely, in places like California, it’s been getting drier, so we’re seeing more fires. These events lead to a greater impact on environmental liability claims. Clients are experiencing more indoor air-quality issues, more impacts associated to fires, where runoff water coming off buildings and streets is causing contamination. I feel that the continual impact that is coming from climate change is increasing our claims frequency and severity which could drive us into a possible hard market in the near future.