News lately has been grim–layoffs, manufacturing plant closures, and bankruptcies–and the duration of the economic slowdown is uncertain. For producers, the economic situation points to reduced premiums, particularly for policies rated on revenue. While there is talk of a return to a harder market, there are no guarantees. Producers developing business plans for 2009 based on a hard market and economic recovery may not have a sound business strategy. So where does a producer find opportunities? One answer is going green.

From the presidential debates to dedicated television channels, the promise of alternative energy and calls for environmental responsibility are everywhere. As many hot environmental issues are publicly debated, people fail to realize the lesser-known environmental burdens that average businesses face, such as engineering controls, regulatory compliance and permit issues. Many businesses have significant investments associated with environmental compliance and protecting their investment is critical for maintaining profitability. From Main Street businesses to huge industrial facilities, environmental insurance is an excellent tool for protecting the bottom line. Environmental insurance is designed to cover almost any type of business operation. Because so many businesses have environmental exposures, yet so few carry the coverage, opportunities for producers are great. Basic Environmental Coverage There are a number of products available to cover a host of environmental risks, but two coverages–site-specific pollution, or environmental impairment liability (EIL), and contractors' pollution liability (CPL)–are used most broadly for a wide range of classifications. EIL coverage is easy to understand. In its most basic form, it provides pollution coverage for any scheduled location on the policy declarations page. EIL provides broad coverage for a variety of "pollution conditions" that might occur as a result of a spill at a scheduled location. A pollution condition is broadly defined as "a gradual or sudden unintended discharge, dispersal, release or escape of an environmental pollutant at, upon, within, under or migrating from" a scheduled location. Coverage typically is extended to third-party bodily injury and property damage if a spill migrates from the insured location. Most companies also provide defense coverage within the limits of liability–separate defense is available as well. EIL policies are typically claims-made and most companies offer multiyear terms. EIL coverage is written on almost any type of business that has a pollution exposure. While all reputable contractors have a general liability (GL) policy, many fail to realize that their policies have an absolute pollution exclusion. CPL is designed to fill this gap and provide coverage for pollution conditions arising from a contractor's job site exposures. CPL covers bodily injury and property damage, cleanup costs, and defense for the insured's contracted operations, available on either claims-made or occurrence forms. Similar to EIL, CPL can be written with multiyear terms on a project-specific basis and may cover a wide range of contracting activities, including environmental remediation firms, HVAC contractors and electrical contractors. Many producers do not realize that contractors have the potential to cause pollution conditions by bringing raw products onto a construction site or by unintended actions that lead to the release of a pollutant. CPL claims arise from all manner of activities, including fuel spills from equipment, vapors from painting operations, and failing to control erosion on a construction site. Premiums for EIL and CPL are affordable for a smaller operation, as low as $2,500 per year. There are no fewer than 10 carriers currently offering some form of EIL and CPL coverage, both on admitted and surplus lines paper. Recession-Resistant Industries Where is all of the green? Which industries perform better than most during recessions? According to the U.S. Census Bureau, more than 70 industries grew during the last three recessionary periods. The following list is a sample of industries with obvious–and not so obvious–environmental exposures. o Healthcare Regardless of the economy, people still get sick and as the U.S. population ages, the healthcare industry is growing to meet the needs of the baby boomers. Hospitals can be major generators of hazardous materials. Recognizing the inherent pollution exposures in hospitals, the U.S. Environmental Protection Agency (EPA) has worked with the American Hospital Assn. to develop a federal agreement to reduce the generation of hospital waste, including mercury, which is commonly present in thermometers, blood pressure monitors and other equipment. Hospitals also generate medical waste, use fuel tanks for emergency generators, and handle radioactive wastes. With the growing emphasis on healthcare, hospitals, medical clinics and doctors' offices are excellent candidates for EIL coverage. o Waste management One man's trash is another man's treasure, and regardless of the economic situation, garbage will still be generated. The treasure lies in the waste management industry. There are literally thousands of private and publicly owned landfills and recycling facilities in the United States, many of which are required by law to have environmental insurance coverage. According to Investor's Business Daily, the waste management industry should do relatively well through the economic downturn because it is a stable business, and trash hauling is an essential service with no substitute. Construction and demolition debris landfills are another segment of the industry where environmental coverage is common, particularly in areas that have had recent natural disasters. Recycling has not fared well recently, but there are signs that commodity prices may turn the corner and help this struggling segment of the industry. Common coverage for waste management facilities includes GL, EIL, auto and workers' compensation. o Utilities: electrical, sewer and water treatment Electrical utilities keep the lights on, sewer systems process all that is flushed down the toilet, and water treatment plants continue to provide drinking water for millions of Americans. Recent news events regarding a large spill at a Tennessee power plant highlight the environmental exposures for utilities. Electrical utilities have a wide range of pollution exposures, including power plants, electrical transformers, coal stockpiles and air pollution. Sewer systems operate 24 hours a day in nearly every community in America. Communities need the coverage for protection against claims for sewer backups, sewer pipe breaks and uncontrolled discharges of sewage leading to significant third-party claims. Water treatment plants use toxic chemicals like chlorine and bleach. A release of chlorine can be deadly, while bleach can pollute nearby waterways. GL and EIL are the most frequently sold coverages for this industry segment. o Education Reading, writing and arithmetic are not going to slow down. In fact, many colleges and trade schools grow during recessionary periods as people look to sharpen skills and avoid a soft job market. While it does not seem possible, schools have significant pollution exposures, with frequent chemistry laboratory accidents as well as underground storage tank leaks. A large university recently had a mercury spill requiring a $250,000 cleanup. Parental concern over student exposure to chemicals in chemistry class resulted in a lawsuit against a Dallas-area school district. EIL would have protected these institutions from such significant losses. o Auto service and repair While cars may not be selling, they still need to be fixed. Any given Main Street has at least one auto service shop. Auto service centers generate a number of hazardous wastes, typically have in-ground hoists that can leak, and may have underground storage tanks. Auto repair shops that do body work generate waste solvents and paints, and are typically required to have an air permit. Auto repair shops that generate hazardous waste are tracked by the EPA as waste generators, subjecting the owners to periodic inspections. In many cases, auto service centers operate on leased property, and the property owners should require EIL coverage as a lease requirement. o Alternative energy A huge topic during the elections, alternative energy issues gained importance as gas prices sky-rocketed last summer. With the recent decline in gasoline prices, will this sector still be viable? Yes. Alternative energy takes on many forms and crosses many industries, and the Obama administration strongly supports the development of the most promising technologies. It is true that alternative energy is a part of the green movement, but it does not mean there are no environmental exposures. Biodiesel manufacturing plants use large quantities of methanol and sodium hydroxide, which become pollutants if spilled. Many municipalities are installing waste-to-energy facilities at local landfills. Slotted piping is placed within holes drilled into closed landfills to extract methane gas that is burned to generate electricity. These industries could benefit from both GL and EIL coverage. Companies designing and installing solar systems continue to see growth through the recession and will require GL, CPL and professional liability coverage. A large part of the growth has been driven by government incentives of up to $45,000 to homeowners and businesses installing solar systems. These incentives are providing strong growth in companies that manufacturer solar panels and companies installing systems. o Infrastructure The new administration is poised to pass a roughly $850 billion economic stimulus package resulting in major infrastructure projects for road, sewer, bridge and water projects. While this sector will likely struggle in the first part of the year, it is anticipated that infrastructure spending will increase during the second half of the year. The stimulus package will result in revenue growth for engineers and contractors in this sector, who will seek coverage for GL, professional liability and project specific CPL. o Farming Economically, the farming industry is expected to have a mixed year. Commodity prices are moving down, but production costs also are decreasing as fuel and fertilizer prices are currently low. One thing is certain for farming operations: increased environmental regulation. The EPA recently strengthened regulations for confined animal feeding operations (CAFO), making uncontrolled runoff of animal waste subject to large fines. Environmental groups also have brought suit against CAFOs, claiming stream pollution and odor issues. Farmers and contractors who apply pesticides, herbicides and fertilizers also are strongly regulated and require coverage from third party bodily injury claims as a result of pesticide and herbicide drift. Applicators require CPL coverage and many farmers are now purchasing EIL coverage. o Environmental consulting and contracting Small to midsize engineering firms are doing well because they tend to diversify their businesses more than larger firms. Smaller firms can adapt to work on a variety of projects like the infrastructure and public works projects discussed above. Packages providing GL, CPL and professional liability coverage are very affordable right now. It's an ideal time to sit down with clients, review their current coverage and make necessary adjustments. The bottom line is that consulting and contracting forms involved with landfill, waste treatment and infrastructure projects should do well in 2009. Finding Environmental Leads With knowledge of the industries that are recession resistant, how does one find prospective clients? While most producers have tried-and-true methods of generating business, resources are available for creating leads that may not have been considered in the past. First, check your book of business. If clients are involved in any of the sectors listed above, there are clear opportunities. Complete a review of current coverage levels, with a focus on identifying any gaps in environmental coverage. Many insureds are not aware that environmental coverage is available and it is a potential E&O issue if the producer does not offer environmental coverage. Even if you don't have clients in the industries listed above, have a conversation with clients to see if there are hidden environmental exposures present in current operations. There are prospects for leads in a range of online resources. One of the best sources is the EPA Enforcement & Compliance History Online (ECHO) database (www.epa-echo.gov/echo/index.html). This simple-to-use Web site provides a detailed list of all facilities in an identified ZIP code with an environmental compliance history. ECHO provides a wealth of information about a given facility, including environmental permits, violation history, and enforcement actions. A recent search of a Denver-area zip code revealed 29 facilities that have used, stored or generated hazardous materials. These included two schools, five auto repair shops, two medical facilities and seven dry cleaners. All of these facilities have a need for environmental insurance. Many states also post lists of environmental consultants and contractors that work on state-funded environmental projects, such as state-funded leaking underground storage tank programs. Environmental underwriters also use Google alerts to track trends in the insurance industry, changes in environmental regulations, and monitor news events including chemical spills and sewer infrastructure projects–a great tool for compiling articles that help sell environmental insurance or compiling other green news. Specialty environmental wholesale brokers also guide producers through the seemingly complex environmental insurance transaction. It is an environmental broker's business to know the various markets and the relative appetite of each carrier, and he or she can be an excellent resource for helping producers to target classes of business that are selling. The key to increasing a producer's revenue will be identifying and selling to industries that will continue to grow. The efforts of those companies that look to become more green will help increase the possibility of producers earning more green.