Up until the last few years, only larger corporations most frequently purchased Crisis Management coverage, but it has since gained momentum for a number of important reasons. With media attention being transmitted in real time and the rise of social media allowing people to share information more broadly, some businesses fear that negative reviews or information about them may spread quickly. Keeping a positive perception of a company from its stakeholders, employees, and the public is more important than ever. Preparing for possible environmental claims has become part of the planning process for many business teams, including identifying exposures and plans to address them.

What Details are Often Publicized During a Crisis?

From a pollution perspective, Crisis Management coverage may be helpful if a release or involvement in a pollution incident suggests that a business does not have environmentally responsible business practices. Some well-known examples of this are PCB contamination, chemical spills, and countless other incidents that have impacted human and animal life, as well as the environment. While many classes of business could be affected by this type of release and the backlash that comes with it, some of the insureds we see most often are manufacturers, suppliers, educational facilities, nursing homes, and medical facilities. 

Examples of a “crisis” could include an auto accident involving a death and/or spill, failure of an employee to respond to a pollution incident, improperly disposing of waste, and countless other situations that could hurt the image of a company. Highly-publicized pollution cases often report on a company’s mishandling of a situation, slow pace in which the problem is resolved, the absence of prevention measures, and the lack of sensitivity surrounding health impact or loss of life. 

Risk Management for Insureds

Instituting operational procedures on how to handle a pollution incident is crucial to preventing a cascade of problems in the event of a pollution release. This may include training sessions to make employees aware of who to call, what measures to take (or not take), and the timeframe in which these actions need to happen. Outlining how your business is actively preventing a crisis or how it will respond if a crisis occurs, is looked upon favorably by insurance underwriters and can help you obtain the best terms possible. We regularly see plans that fit within this type of approach, including spill prevention plans, evacuation plans, and other risk management strategies.

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The way our culture thinks about environmental issues has changed dramatically over the past several years. People are more educated and aware of problems stemming from pollution releases and are more willing to take action against a business. Discussing potential crisis situations should be part of your conversations with your insureds; being prepared for pollution releases and possible public facing news is an important factor in a risk management program. 

For more information or to discuss an account, please contact us.

Sources:

https://www.investopedia.com/terms/c/crisis-management-coverage.asp

www.irmi.com

https://www.coverwallet.com/general/crisis-management-insurance