Placing You First Insurance Podcast by CRC Group
The Placing You First Podcast spans a diverse spectrum of insurance industry issues to keep you and your clients informed.
Placing You First Insurance Podcast by CRC Group
Beyond Compliance: Real Protection for Pollution Losses
Spills don’t wait for business hours, and neither should your coverage. We dig into transportation pollution liability with Mike Padula, President of Starwind Environmental, to discuss why relying solely on MCS-90 or CA 99 48 can leave painful gaps when real-world logistics meet environmental scrutiny. From remote cleanups to loading dock mishaps, we break down how TPL delivers true risk transfer, rapid response, and specialized claims handling that standard endorsements simply can’t handle alone.
We explore hidden exposures many teams overlook: loading and unloading, staging, third-party carrier use, and non-auto modes like rail and watercraft. If you advise motor carriers, shippers, or anyone moving goods, this conversation will help you turn compliance into real protection and keep operations moving when the unexpected occurs.
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Hello, and welcome to another episode of Placing You First, the podcast where we dive into the trends, challenges, and opportunities shaping the insurance marketplace. I'm Scott Gordon.
SPEAKER_03:And I'm Amanda Knight, and today we're talking about a topic that doesn't always get the spotlight it deserves. But when a loss happens, it can be devastating. Today we are talking about transportation pollution liability.
SPEAKER_00:That's right. Many motor carriers and brokers assume endorsements like CA9948 or MCS-90 cover them fully, but the truth is these often leave big gaps. A true transportation pollution liability policy, what we'll call TPL for short, is designed to fill those gaps and protect against real-world exposures.
SPEAKER_03:And we're thrilled to have the most perfect guest to unpack this with us. Joining us is Mike Fedula, president of Starwind Environmental. Mike has over 25 years of experience in environmental consulting, claims, and underwriting, and he's seen firsthand how these exposures can play out and how the right coverage makes all the difference. This is the Placing You First Podcast from CRC Group. This podcast features news and insights from a vast knowledge base of more than 5,500 associates who write more than 30 billion in premium annually. Plus, we give you the latest information on what's happening at CRC.
SPEAKER_00:This is the Placing You First Podcast.
SPEAKER_02:And now the hosts of the podcast, Amanda Knight and Scott Gordon.
SPEAKER_03:Mike, welcome to the show.
SPEAKER_01:Yeah, thank you both. Uh real pleasure to be here. I've been a longtime fan of uh placing your first podcast, even before I joined the CRC group. So kind of a real treat to be on this side of the microphone for once.
SPEAKER_03:Right. I mean, we haven't had the pleasure of having you on the podcast before. So before we jump into the fun of pollution liability coverage, um tell our listeners a little about Starwind Environmental, Mike.
SPEAKER_01:Yeah, sure. Um, yeah, I joined the Starwind team back in October 2024. So it's approaching a year. It's been a I can't believe that. It's been a fast and furious year.
SPEAKER_02:Right.
SPEAKER_01:But I was brought on to build out the um environmental liability vertical here within the Starwind platform. And what really excited me about the opportunity were really three key elements. Um, one was the distribution model. Um Starwin's approach to market access and and broker relationships is just really strategic and forward-thinking, which aligned with what I was trying to accomplish. Two was great support for innovative product development, not only internally, but from our reinsurance providers. And three, the technology push. You know, we've we're making significant investment um in the organization, very main cutting edge. On the distribution side, you know, what what what we're trying to do here is one open market. We're distributing product directly to our ENS brokers, mostly wholesale brokers. Um, and this allows us to engage directly with brokers that have unique environmental risk where we can bring our expertise to the table and provide the solutions. But the second thing that's really exciting is this concept of bolt-on insurance, where we're partnering and collaborating with other Starwind platforms to embed environmental insurance within the existing product. This scales down the time and effort needed by brokers to place environmental coverage by embedding that coverage directly within an existing policy. On the product side, uh, when I did when I came here, my my focus was to develop an easy to use product that even insured can pick up. I've been in industry a long time and I've read policies from other folks that it just it's very they get very complicated. And even the most seasoned, seasoned the professional has a really hard time, you know, kind of getting through it and understanding. So within that product, um, we've developed this modular approach where it gives insureds the ability to pick various coverage parts, um, pick different limits, pick different deductibles. So it's very customizable.
SPEAKER_03:So you mentioned that this can be really complex, right? It's a environmental coverage, um, can be tough for a variety of people to understand from the insured to the broker or the agent themselves. So let's start with the basics. Um for listeners who might not be as familiar, I mean, what is the difference between the endorsements that Scott mentioned earlier, the CA 9948 or the MCS90, and then a true TPL policy?
SPEAKER_01:Sure. Yeah. Let me start by saying, you know, MCS90 and CA 99948 are really integral parts of an auto liability framework and they're not to be replaced by a TPL. The TPL is really there to enhance and fill in some of the gaps left by those mechanisms. The MCS 90 was developed in the 1980s to uh ensure that motor carriers transporting hazardous waste across interstate lines um had the financial means to cover bodily injury, property damage, and environmental restoration from their from their operations. Um the the key thing is that it's not true risk transfer, right? So if there is an incident, um an insurer pays um um those damages, they can seek uh the reimbursement back from the insured. So you're not you're not really transferring the risk. You still have the same same liability at the end of the day. So that's kind of the big thing with MCS90. C9948 was uh an endorsement created by ISO to kind of fill in some of the gaps in the standard auto liability policy. Um and the difference from MCS90 is it does provide true risk transfer um um uh mechanism, right? Um so it does cover uh cargo when it's being actively transported. And that's where we need to kind of focus is there's all these other things around transportation, such as loading unloading, staging, other ancillary exposures that are not necessarily covered by CE 9848. And um, a lot of insureds think they have this um, you know, this mechanism that covers all their exposures and they're and they're left with gaps. And that's where the transportation pollution liability policy comes in, is that it's filling the gaps left by CE 1948 and MCS90. It's it's by far the most comprehensive um pollution risk transfer mechanism. Um in addition, DPL is highly uh customizable, whereas like C 9048, it is what it is. You know, it's it's it covers X, and there's that's it. With TPL, there's a lot of variability, as we were talking about before. You could buy different limits, different deductibles, different coverage parts to cover all of your exposures. So um, you know, in summary, again, MCS90, C 9048, really important, but the TPL really covers your broad pollution exposure associated with your operations and and and a mechan and a policy that really should be explored by brokers for their transportation risks.
SPEAKER_00:So really, when we're talking about brokers and insureds who rely only on these endorsements, they're kind of missing the full picture. Um so I know we touched on this, but why do you think it's so important to go beyond regulatory compliance and think about, say, broader environmental risk transfer?
SPEAKER_01:Yeah, thanks, Scott. Good, great question. I mean, look, we live in a world where there's heightened environmental scrutiny every day, right? I mean, you turn on the news, whether you're local media, national media, you scroll through your phone, um, uh you're gonna find something related to an environmental incident. I mean, just a couple of years ago there was a major incident in the Midwest, got that national coverage. That's the extreme. But they also happen every day on our local roadways where there's an upset and overturned fuel oil dealer, uh, you know, some other commodity that's causing a road closure that needs cleanup. They're they're happening. And um, the public is much more aware of issues surrounding the environmental uh incidents. So even you know, when we think about environmental liability, everybody assumes, oh, it's only for the ultra-hazard hazardous industries. Everybody has some form of environmental uh exposure, and it's important that you address it and go beyond just the regulatory mechanisms. You talked a lot about social inflation and nuclear verdicts on this podcast with other um specialists before. They apply to pollution too, right? Um juries are not um are not sympathetic to companies that harm the environment, right? They um the environment is near and dear to all of us, and we need to protect it. So um environmental claims can be large, they can they can be uh awards and verdicts can be unpredictable. Um so you need to have the proper policy in place to help defend against that litigation, uh protect your insured's balance sheets, and really um allow you to continue to operate your business while you let the experts handle the environmental matters. And then lastly, with you know MCS90 and C948, you may not have the expertise to respond, they may not have the expertise to respond to an environmental claim. With Starwin Environmental, you have access to a 24-7 emergency response hotline. So if you have an incident um, you know, July 3rd before you're ready to take off for the weekend, you have a an upset and overturn, you have some support there to help you um navigate that that crisis. And in the claims process, we have an embedded claims team with us here at Starwood, handled by our partners at NCS, National Claims Service. Um some great environmental expertise within that shop that helps us and our clients manage environmental claims. So you get that special expertise with the uh transportation pollution liability or any of the pollution liability politics that they offer.
SPEAKER_03:You know, you mentioned that every business on some level, or at least most, have some level of environmental exposure. It's just maybe not top of mind based on what they do, what they sell, what they make. Um do you have any I'm curious, do you have any recent or memorable claim scenarios that could maybe drive that point home or or maybe it's helped um emphasize or illustrate how these different coverages would apply?
SPEAKER_01:Or yeah, I mean, I could spend probably the next four hours talking about environmental claims, and that's pit that's typically what most people like to talk about. They they could care less about the coverage, but um you know, claims is where the rubber hits the road. Um you know, I think thinking back through my career, I mean, one that kind of sticks out uh kind of kind of somewhat comical. I had a new underwriter um uh that I joined my team. If she's listening to the podcast, she's probably laughing already. But um I thought it was going to be a great risk for one of her first uh to handle, and it was a petroleum hauler in Alaska, like which is one of the most difficult geographic regions to write. But I thought this was a great idea. It had some premium attached to it. And within a month of writing the policy, we had a um a tanker truck going up the north slope that lost control and um spilled several thousand gallons in frozen tundra. Um, they had MCS-90, but they didn't have CM948, and we were the mechanism. So, I mean, it was uh it was an important policy for them, and we responded. What made this one unique is that we were three hours north of Anchorage with no real lodging. So the response team handling handling the cleanup had to mobilize and demobilize every day and drive three hours north to the spill site from Anchorage and then three hours back. And the claim ended up costing us around three million dollars um to clean up. That that's kind of the extreme side of things. But we had another one where it related to loading and unloading, which again is not always covered under CA 9948. And this is typically what happens, it's like an oversight of some operator. Um, you know, he hooked up his hose to the tanker, to the tank that he was filling, decided he was going to go talk to his buddy and grab a cup of coffee and left the side of the truck where they were doing the loading and loading, which you should never do in the first place. You always need to, you know, you have a line of sight when you're doing any type of that activity. But they walked away. And, you know, of course, when he walks away, the hose uh wasn't necessarily connected correctly and um released, and um several hundred gallons of product were released into a nearby creek. We had some environmental disaster because we uh ended up um impacting a uh endangered species within that creek. So not only did we have to worry about the um the cleanup, but we also had to restore the environment and and pay some environmental damages and fines, which again, not always covered under a um autoliability policy. So, you know, I could keep going, but I think you get the point that these environmental incidences from transportation could come fast and furious, and from really any aspect of the all transportation scope.
SPEAKER_00:That is crazy. The stuff spilling onto the frozen tundra. You know what they call that, Mike? Those in the industry they call that the Lambeau field when that happens.
SPEAKER_01:Yes, indeed.
SPEAKER_00:They call it the the the Lombardi special. Um, but that's nuts. Um, so in cases like that, many brokers they may not realize these hidden gaps until it's too late. Um what are some of the most common coverage gaps, Mike, that you see catching people off guard these days?
SPEAKER_01:Yeah, well, I think it really goes back to when we're focusing on MCS 90 and C948, they only really apply to registered motor vehicles. If an insured uses other modes of transportation to transport product, let's say a rail car, watercraft, even aircraft, um, those are not covered. Those those modes of transportation are not covered under an auto liability policy. And you may not have the right mechanism in place to cover it. So um our transportation pollution liability goes beyond just auto liability. It covers these any any scheduled mode of transportation. And we can get creative and um you know really dig into the risk and and try to understand it. Um and in fact, we have uh one now quoted for some rail car transport. Um so uh, you know, the the the transportation comes in all shapes, sizes, and modes. Um the other one is that under CA948, it's typically only applies to covered autos. So a lot of industries will use third parties to transport their product on their behalf. And just because you put your product on somebody else's um uh vehicle doesn't mean your liability ends, right? So if that if that car if that the third party carrier doesn't necessarily have the right insurance or the contract is is insufficient, the regulators are going to come back to you because it's your product. And that, again, may not be covered under some of these other mechanisms. So if you're you using third-party transportation, it's always good to have that extra layer of protection above and beyond any contractual um indemnities that you may be provided from from the third party or relying on their insurance to have your own. And then lastly, this happens more often than not. It's it's um it's still unbelievable. I mean, again, environmental insurance not always thought of as the first liability insurance. I mean, it's not a CGL policy where everybody's buying CGL. It's becoming more popular. But what we find is a lot of um third parties require a uh contractor's pollution liability policy to enter their job site, right? Regardless if you're doing anything like swinging a hammer or building something, they want that line of coverage for you to take a step on their property. And what we find is they the guy pulls up to the job site to deliver the cargo. They don't have the coverage, they're not allowed on the site. And this leads to the classic three o'clock Friday afternoon frantic call from a broker. Mike, my client can't complete the job. They won't let him on the site. What can you do? And Amanda, I this is the part of the job I love, right? Is like, you know, scramble up to be the hero, right? And help help make the broker be the hero.
SPEAKER_02:Sure.
SPEAKER_01:But like finding that solution on a on a Friday afternoon or a Saturday morning, you know, whatever, whatever it takes, you know, and and getting getting that coverage. So, you know, it pollution liability, just it's not only just that little sliver of transportation, it's other things that may be contractually required that often gets overlooked.
SPEAKER_00:So, Mike, for retail agents and brokers listening right now, what's the very first step that they should take to evaluate, you know, whether their clients need a true TPL policy?
SPEAKER_01:Yeah, I I I think we kind of, if we could summarize the conversation that we've had so far, you know, one is you know, you really got to take a deep dive and look at all their exposures. I mean, the obvious ones kind of stick out, right? I'm carrying cargo X from point A to point B, right? Yes, that's but I mean, we've talked about do you have any um contractual obligations that require specific insurance lines of coverage, right? Making sure you're going through their contracts to understand, yeah, oh yeah, they do need contractors pollution liability for this one contract. Um do they have um are they relying on other uh third parties to transport their materials, reviewing their contracts, making sure that the insurance requirements are up to date, uh, that they're sufficient, uh, that there's good indemnity provisions, but also supplementing that with uh potential uh potential live pollution liability insurance. Um looking at all their uh the the different aspects of their operation, where do they where do they lack the coverage that they need from a pollution standpoint? Is it their facility? Is it their um contracting operations? Is it something else that maybe we need to fill? So um, and then really uh explaining the the gaps created by CE948, you know, most a lot of insurers think, yeah, this is this is it, this is the end all be all. But letting them know, like, hey, look, this is these are the limitations of CA948. It's an important mechanism in your risk transfer transfer tool, but it's not the end-all be all. Are you prepared um not to purchase this other line of coverage that can give you the full protection? Do you have the financial means and wherewithal to manage those claims? Right. And and and and really um, you know, it's for first it's protecting the broker agent's EO, right? You know, that they recommend this coverage. And if something happens, at least they have a paper trail like, hey, we recommended this to you. Um but um really making the uh the insurer understand, hey, this is a financial liability that you may have. You don't have the resources internally to manage this. This is a mechanism that can help. And in the scope of an auto liability policy, most of the time a transportation pollution liability policy from a premium standpoint is a fraction of the auto liability policy. So not a big financial burden.
SPEAKER_02:Right.
SPEAKER_01:Um, and something that, you know, I think brokers and agents should communicate to their clients about and um letting them know that this is an available uh coverage for their for their business.
SPEAKER_03:Well, and and you know, we kind of try to emphasize we know that retail agents don't necessarily always specialize in in just one line of business or one coverage. Um and so in my mind, this is where Starwin Environmental fits in, right? Start that conversation early. Talk I mean, you've been doing this for more than 25 years, you've got a great team. Um in my mind, it all kind of starts with having that conversation with you. Um and I know you primarily focus on wholesale brokers, right? So art and I know you work a lot with um CRCs specialties brokers, um which we love. Uh so I think just encouraging folks to pick up the phone and or send an email and just start with, here's what I have, Mike. What do I what am I missing, or what do I need to know? Would you agree with that?
SPEAKER_01:Absolutely. Um, you know, I it's one of the things that it it seems so basic is picking up the phone.
SPEAKER_03:Right.
SPEAKER_01:The phone rings and not letting it go the voicemail. And um I kind of if if the phone rings, I don't even if I don't know the number, I pick it up because you never know who's on the other line.
SPEAKER_02:Right.
SPEAKER_01:And of all too often I hear, oh my god, you picked up your phone. You're one of the few people that actually pick up your phone. Like, it's a I guess it's a lost art. Uh I don't understand how you don't pick up a phone, but um, you know, I love talking to people. I love talking to people about environmental insurance, as you know, I'm sure you could see from this podcast. But um look, yeah, I think um, you know, myself and my partner in crime, Todd Brooks, who is uh my my associate here, we've been doing this. In fact, a little known secret. Todd and I went to we're college roommates for four years at the University of Delaware. And uh so we've we've known each other for a very long time. So we have this great working relationship. We're on the phone multiple times a day, talking about risk, talking about, you know, the next our next conquer, uh, next product that we're gonna conquer. Um but um, you know, really um, you know, trying to find solutions for for our brokers. And the industry's come a long way over the last 30, 40 years. I mean, kind of established in the 80s environmental insurance, refined in the 90s, and now we're kind of to the point in the 2000s and late mid mid-2000s, I guess, you know, where where the product has really become a staple in uh risk transfer liability. Not only have um the underwriting side evolved, but the brokerage side has evolved. There's specialists within um on the retail side that focus on environmental, there's specialists on the wholesale side, and you hit the nail on the head. Yeah, a lot of business right now from CRC, one of the best environmental wholesale shops right here within the CRC group, led by some great folks, really smart folks that understand risk. So if there's agents out there listening and you don't understand environmental insurance, great resources within the CRC brokerage team that can help you navigate it. And hopefully they navigate to us where we can. But there's a there's a lot of options out there and a lot of great environmental uh companies. But um, you know, we're we're um you know, we with the experience that we have, by an experience of almost 50 years in the business, um, we we really try to take a focus on finding solutions, whether it's through the open market channels or even this bolt-on concept, where you know, eventually you might be able to access our TPL product through an existing product like Insure Risk. We're working with Alex's Alex Bonds' group to see how we can coordinate and collaborate with them to offer TPL through their transportation. So a lot of exciting stuff, a lot of expertise. We're we're we're really um excited and look forward to helping out um the brokerage community with um with these unique exposure.
SPEAKER_03:Well, I know CRC specialty is glad to have you all as a as a go-to resource. This has been fantastic. So to sum it up for our listeners, endorsements like CA 9948 and and CS90 might meet minimum compliance and they are definitely valuable tools, but they're not the whole thing, right? There's more to it than that. And a true TPL policy offers broader protection, cleanup, defense, even fines and penalties in some cases. And brokers should take action now to help protect um our retail agents' clients. So um this was a great, I learned a lot about environmental coverage.
SPEAKER_01:Awesome. I love talking about it. I'm glad I'm glad it and I hope it's I hope it's uh useful to the listeners out there as well.
SPEAKER_00:Yeah, this uh I I I am always interested with this. I talk with Amanda on this thing every once in a while about how there are certain in insurance coverages that are very specific to certain industries, certain things. But this is one of those things I think that touches everyone at some point. So this is always interesting to learn about. Mike Pedula, ladies and gentlemen. Thank you. He works with his college roommate, and between doing keg stands, they will answer your phone calls. Absolutely. Um uh so let's get into something a little lighter. Before we let you go, we want to try something that Amanda and I like to call rapid fire. And it's just whatever comes to the front of your mind, the first thing on the tip of your tongue. Okay. The first question is, and I love this question.
SPEAKER_03:I knew you would love this one.
SPEAKER_00:I know, and it's so much better than for the rest of your life. Uh, but if you could only listen to one band or artist on a cross country road trip, who would it be? Just one artist. Come on, not a cross.
SPEAKER_01:No, I couldn't do it. I couldn't do it. I I need at least a couple, so I'm gonna take a little bit of a really two. Okay. Well, I have to I my my niece is an up-and-coming artist, and and this is not a promotion, it's just like they do love her music. Uh, but she's an up-and-coming artist in uh in Nashville, Jess Nolan, uh a little uh singer-songwriter, um, you know, type type style, so it's great. But I lived in Texas for 10 years, originally from um New Jersey. So you can imagine, you know, grew grew up listening to Springsteen and and Bon Jovi. Uh country music was never pie on my list until I got to Texas. So I would say I need to have a little bit of a country mix with a little bit of Robert Rulkeen, a little Jerry Jeff Walker, and a little Lyle of it. And I think that between those artists, I think um I could get at least two from Jersey, at least halfway into Pennsylvania.
SPEAKER_03:So there you go. Okay, next up, what is the strangest or most interesting cargo you've ever heard of being transported?
SPEAKER_01:I mean, well, look, I mean, if whatever you buy, you know, online anywhere has been transported in a truck. Grocery store, whatever you put in your car, it's all so the next time you're riding down the road and you see an and you're next to an 18-wheeler, you can only imagine what cargo they're hauling. Let me let me turn it this way. What was the most interesting pollution event I ever had?
SPEAKER_03:There you go. That's a good one.
SPEAKER_01:Yeah, even better. Milk. Nobody thinks milk would be pollutant. But we had a um, and this is actually quite common. I've been working with actually uh Jake Blackshear's group, and uh they they we've we've written a couple of these milk haulers, which is uh which is great. Um but we had a years ago we had a risk up in um this Pacific Northwest and upset and overturn, milk went into a nearby stream, and again, one of these where there was some endangered salamander or something, and we ended up having to pay like$500 a salamander or whatever, whatever the aquatic life was. I'm using salamanders and some ecologists is that listening is gonna be like there's no uh there's no salamanders out in the Pacific Northwest, who knows? But it was some uh some wildlife that and the reason was that you know milk has a different pH than natural environment, and we changed the pH level in the creek and the stream. And so anyway, that that was the most um, I think, interesting and unique uh pollution exposure.
SPEAKER_03:I would have never thought of that.
SPEAKER_00:Yeah, yeah. The good news is the ones that survived had really strong bones.
SPEAKER_03:That's right.
SPEAKER_00:That's right.
SPEAKER_03:All right, last one. If you were not an insurance, what career do you think you'd be in today?
SPEAKER_01:Yeah. Well, I love building, right? I love I love designing something. That's why I'm here, right? I had an opportunity to design a product from ground up. Uh first day was a blank computer screen and a white page on my desk where I had a create. Um so it it gives me a lot of uh joy to create something and CDM products. So I I think if I wasn't doing this, I'd be a general contractor. I love I love on the weekend, swinging a hammer, cutting some wood, uh you know, do building something. And yeah, so um, yeah, I I uh I I envy general contractors for some reason that I think that's like the the greatest job ever. Um, you know, who knows? Maybe they they think environmental insurance is the greatest job ever.
SPEAKER_03:But uh I mean at least you get air conditioning, they don't.
SPEAKER_00:That's right. That's right. Well, this was great, Mike. Thanks for joining us, and you know, thanks for lending us your expertise to the podcast. It's great talking with you.
SPEAKER_01:Yeah, you too, Scott. Thank you, Amanda. Really appreciate the uh the opportunity to be here today.
SPEAKER_03:Of course, and thanks to all of our listeners for tuning in to Placing You First. If you enjoyed today's episode, make sure you subscribe and check out Tools and Intel for more insights from CRC Group. We'll see you next time.
