See what’s emerging

Green consulting is going places and provides a great opportunity for brokers, Lee Hudson tells John Watson

The nation is going green. Across most aspects of our lives, there is a renewed focus on managing waste and recycling, trimming carbon emissions, energy management and caring for the environment. Businesses and local authorities have to make sure they meet strict green criteria and can face penalties if targets are not met.

Shaping this transformation is a new army of green consultants, advisers and specialists. This emerging profession is hungry for the right insurance to back their fledgling businesses.

Leading Hiscox’s push into this rapidly growing sector is Lee Hudson, Regional Underwriting Manager for the South of England. Lee is no eco-warrior, but he’s been with Hiscox for ten years and can spot a good business opportunity for brokers and insurers. “After all, we’ve been doing just that at Hiscox for years,” he says. “We were the first out of the blocks with tailored cover for IT firms, recruitment consultants and secondary intermediaries, to name just a few.”

According to a 2009 report commissioned by the Department for Business, Enterprise and Regulatory Reform (BERR), the UK’s green economy is growing by 5% a year, despite current economic conditions, and an additional 400,000 jobs could be created over the next eight years.

The continuing raft of environmental legislation from both the UK government and the European Union (see panel on page 6) underpins this market growth. Individuals, companies and local authorities will all require help to comply with the new rules.

“There will be a reduction in the government’s overall consultancy bill as public sector spending decreases in the next couple of years,” Lee says. “But the coalition’s commitment to tackling climate change means that the green sector is probably one of the few areas that will buck the trend.”

The BERR report highlights that, even taking into account the economic slowdown, the sector is forecasted to increase in value by up to £45 billion before 2015.

“We’re ready for the unusual,” Lee says. “We enjoy being challenged by the risks and the companies that are hard to pigeonhole, so it’s a market well suited to Hiscox. We always try to keep an open mind and brokers know they can get direct contact with a decision-maker.”

Appropriate professional indemnity is important in this sector. Local authorities and other public sector clients demand a minimum level of PI as part of the tender process.

The biggest risks consultants face is that their advice turns out to be flawed, or that it is not implemented correctly. Local authorities can face penalties if they do not meet targets for recycling or energy reduction, which they may look to recoup from their financial advisers.

One Hiscox client, for example, acted as a recycling consultant for a local authority, which claimed that advice received failed to deliver both the price saving promised and the required reduction in waste. “Our client’s policy paid for defending these allegations and protected his professional reputation,” says Lee.

And it’s not all about poor advice or not hitting targets. One consultancy firm, which helps businesses towards a zero-carbon footprint, produced marketing material for its customer accusing its competitors of polluting. “The firm’s Hiscox policy paid for the defence and settlement of all subsequent claims of libel,” Lee says.

But Lee argues that the value of insurance is not only about the financial loss. He says: “In this area, your reputation is hugely important, so we have a slightly different approach to handling claims than some other insurers. We can bring in specialists in crisis PR, for example, to manage the way an incident or problem is communicated.”

Hiscox has seen policies for green consultancies grow threefold in the past two years. Many of the businesses in this sector will start small, often with one or two people working from home. “You start small, with some professional indemnity and some public liability insurance,” Lee says. “Then, as the business grows, they start adding other lines of cover.

“Our cover has always been designed to support young and entrepreneurial businesses and then grow with them. We insure about 70,000 SMEs and many have stuck with us from the start.”

While he is based in Bristol, Lee’s position sees him spending time at Hiscox branches in Birmingham, Colchester and Maidenhead. A keen cyclist, he often travels by bike and train, helping him keep in shape for the weekends when he joins friends for punishing hill climbs or road races.

During the working week, Lee is regularly in touch with brokers and clients in the market. Over the past two years, Hiscox has been open about its appetite to develop and increase the commercial schemes it underwrites. This sector is no exception. Lee says: “We’re keen to team up with brokers to develop relationships with the emerging trade bodies and professional associations in this market.”