From the Front Lines: Environmental Liability

JohnsonAnnie Johnson

Producer/Co-Principal
Johnson Insurance Group
Soldotna, Alaska

How did you get started at your agency?

I got started in insurance at the age of 18, when I started out as a receptionist at an independent agency down in California. The week after I started, the personal lines agent in their office quit. I was in licensing school at the time, so I got licensed quickly and moved into a position as a personal lines CSR. But I always had more of an interest in business insurance, and I eventually moved into the commercial department, where I worked as a commercial CSR for several years.

Then, my husband, Blaine, got a job offer in Michigan. When we moved there, I worked at The Hanover Insurance Company as a direct sales agent, until we decided we wanted to move back home to Alaska—we’re both from here.

I spent three years up here as a p-c producer for another independent agency, and I worked that job until Blaine and I were ready to open our agency, which we did in 2013. Blaine and I had always talked about one day opening an agency, and once we moved back up here, there was a lot of opportunity. We saw a real need in our hometown for another option for the businesses in the area.

Why environmental insurance?

So many businesses out there have an environmental exposure, and it’s usually not covered adequately by their current insurance. That becomes a real conversation starter when you’re meeting with a prospect or a client. And with environmental insurance, for clients who have a low risk, the minimum premium remains relatively low—which means it can be a really affordable way to fill some potentially serious coverage gaps.

Also, in addition to his sales background, Blaine also has a background in oil and gas, so we work with a lot of clients in the oil and gas industry up here. That goes hand in hand with environmental insurance.

Biggest environmental insurance changes over the years?

There are changes consistently happening in public policy and environmental laws, such as the Clean Water Act expanding in 2015. It’s a consistently changing exposure.

Biggest environmental insurance challenges?

One of the biggest challenges on the broker side is the wide range of non-standardized policy forms. That can make it difficult to compare and correctly match up the coverage needs to the buyer. I’ll give you an example: We have a client who got a storage tank policy through a prior broker, and they ended up being declined in a leakage claim due to a very, very broad interpretation of an exclusion in their policy. It’s an exclusion that’s not included in all tank policies, and it wasn’t caught by the agent or the insured. You have to be very careful when reviewing those policy forms and exclusions, since there is no standardization yet.

And since environmental insurance is not as widely sold as other lines of coverage, it can involve an educational process when you’re meeting with your client. The application process can sometimes be long and tedious, and it can be a difficult sale.

Advice for a fellow environmental insurance agent?

Just like when you’re selling professional insurance, make sure your client’s very thorough on the application, and request copies of specimen policy forms with your quotes so you can actually review the coverage forms and ask questions.

Favorite environmental insurance success story?

One of the things I love about environmental insurance is the opportunity to fill coverage gaps and sell on coverage as opposed to price. Blaine and I have gained several clients in the oil and gas industry by just starting the conversation with a question such as, “If that pipe weld failed and resulted in an oil or gas leak, where would you expect the money to come to pay for it?” We’ve come across many clients that only had a general liability policy, and they expected that or their $5-10 million excess to pay for it. When you get a situation like that, it becomes a conversation about their coverage needs, and the environmental line just kind of sells itself.

Jacquelyn Connelly is IA senior editor.