What Will Environmental Insurance Look Like in 2025?
The environmental insurance sector is experiencing a transformative period, with emerging trends reshaping carrier strategies and market positioning. Contractor Pollution Liability (CPL) has become a focal point of industry evolution, signalling significant changes in risk assessment and market approach.
Jencap Specialty Insurance Services' managing principal Canaan Crouch describes the current CPL market as remarkably competitive. "There's a lot of capacity and carriers vying for this line of business, creating what sometimes feels like a race to the bottom," he explains. Property and casualty carriers are particularly drawn to environmental insurance, viewing CPL as an accessible entry point.
Underwriting simplicity and market dynamics
The attraction stems from CPL's relatively straightforward underwriting process. "The underwriting for CPL, while still requiring discipline, is generally less complex than what's needed for a site pollution policy," Canaan says. This simplicity aligns perfectly with the Excess and Surplus (E&S) marketplace, which has traditionally been contractor-focused.
The integrated casualty product sector is simultaneously experiencing significant market pressure. These products combine CPL or Pollution Legal Liability (PLL) with General Liability policies, creating a more comprehensive risk management approach. The small business commodity market has seen particularly aggressive pricing dynamics, with premiums potentially dropping from an average of US$2,000 to as low as US$1,500.
Capacity and coverage shifts
However, the market isn't uniformly soft. Excess limit capacity has notably contracted, with carriers now typically offering US$5m to US$10m in coverage, compared to previous limits of up to US$25m.
Expanding risk appetites
A profound shift is occurring in carrier risk appetites. Historically, environmental carriers required at least 50% of a business's revenues to derive from environmental operations.
Now, the landscape is expanding to include previously overlooked sectors. "We're now seeing carriers consider additional risk classes, such as wetland and wildlife consultants, weed abatement, sewer and septic contractors, as well as those involved in forestry management," Canaan says.
The role of brokers in navigating change
Jared Dubrowsky, Senior Vice President at NFP Environmental Practice, emphasises the critical role of brokers in navigating these changes. "It's our responsibility to understand who our clients are, what they do, and how changes in their industry will affect their insurance needs," he says.
Complexity and expertise in insurance
Angela Oroian, president of the Society of Environmental Insurance Professionals, underscores the complexity of this evolving landscape. "There are so many different coverage variations in what we do in environmental insurance," she says.
"Being a resource and an expert—knowing who needs what, what it covers, and when policies take effect—adds value not only to you as a broker but to your clients, helping you stand out in the industry."
The outlook for environmental insurance
The implications are clear: environmental insurance is no longer a niche market but a dynamic ecosystem requiring sophisticated understanding and adaptive strategies. As carriers continue to explore new risk classes and brokers become increasingly specialised, the sector stands at a critical point of transformation.
"Being a resource and an expert—knowing who needs what, what it covers, and when policies take effect—adds value not only to you as a broker but to your clients, helping you stand out in the industry."
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