AIG is facing a number of high profile difficulties at the moment and is undergoing a number of changes. And as part of its strategic restructuring it has announced that its environmental policies will no longer offer Pollution Legal Liability (PLL) coverage.
PLL coverage is generally used when clients make a deal that has environmental concerns surrounding a property in the transaction. Although PLL usually won’t cover known environmental issues it can help provide coverage for unknown pre-existing issues that might become apparent later on down the track. Lenders on a property deal will often require coverage if pollution or environmental issues could be a concern.
Although AIG will honor existing policies it is advising current clients that they will not be renewed.
AIG’s decision has come at a time when the environmental insurance industry is growing fast at nearly 30% a year and competition is softening premiums – Insurance Market Outlook reports that the market capacity is currently in excess of US$600m. As the industry matures it’s starting to specialize and carriers are building niche products. Ten-year policies are becoming far less common than they once were and although five-year policies are available for transactional risks, carriers are becoming more cautious with higher risk industries, preferring to limit policies to one or two year terms.
