Insurance Marketplace Realities 2026 Spring Update – Environmental

2025 concluded with a few markets reverting from dual retail/wholesale distribution to wholesale distribution only. 2026 began with mergers of environmental markets with differing strategies — while remaining and new-entry markets adjusted their capacity/policy term/pricing strategies to maintain profitability in the face of ever-increasing competition.

An ever-changing lineup of carriers continues to offer an all-time high for environmental capacity, creating downward pressure on environmental rates despite the increasing cost of claims.

Even as they face global economic uncertainty, carriers are looking to expand their appetites for environmental coverage to address new client needs.

Layered programs involving multiple carriers for lower-limit programs are gaining appeal with insurers looking to expand capacity, manage rates and expand carrier relationships.

While some investors await better economic certainty, the application of environmental insurance has become even more essential for mergers, acquisitions and real estate transactions.

Emerging exposures and opportunities continue to fuel the creation of new environmental products and the reimagined use of some old ones.

With remediation thresholds for PFAS (per- and polyfluoroalkyl substances) and other GenX chemicals looming closer, PFAS restrictions are now common across most property and casualty lines, although environmental coverage may be secured for companies that can demonstrate de minimus exposure.

Recent moves made by the Environmental Protection Agency (EPA) have signaled a continued interest in carbon capture and storage/sequestration as carbon generators and consolidators look to benefit from the associated 45-Q tax credits.

New developments in risk transfer products or combinations of existing products are being applied to new environmental opportunities, such as carbon sequestration (natural resources) and reps and warranties (M&A).

Ethylene oxide (EtO) continues to emerge as a potential contaminant to watch as recent court rulings find that even permitted emissions may not override the pollution exclusions of standard casualty markets.

In 2026, clients should look to enhance their environmental incident reporting protocols and expense documentation to potentially improve claim outcomes.

Rising remediation costs and the potential for multi-coverage claims (environmental, property, general liability) have moved carriers to take a more active role earlier in the claim process to mitigate losses.

Major losses arising from ancillary environmental coverages, such as transportation and non-owned locations/disposal sites, serve as a reminder of the importance of these coverages.

Despite recent claims for Legionella across the U.S. in 2025, carriers continue to offer affirmative coverage for indoor air quality (IAQ) issues, including mold and Legionella, but many employ various underwriting tools (class of business, named peril, per-door deductibles) to mitigate their exposures.

Clients are experiencing regulator-driven PFAS claims arising from expanded monitoring beyond a location’s original contaminants of concern — creating possible consequences for both active and closed cleanup sites.

Environmental exposures in the construction industry persist and are expanding.

An uncertain regulatory environment and economy have resulted in heightened underwriting scrutiny around property transactions or locations intending to expand or modify their operations. Review of future intended use and redevelopment plans for covered locations may be required.

Excessive siltation and stormwater exposures continue to yield large pollution claims for new construction projects — even clean energy projects (solar and wind) have proven susceptible to these exposures.

Carriers are expanding their product suite to include contractors pollution and professional products (for general contractors) and others are also further sharing their aggregate limits with monoline site exposures on the same form.

Redevelopment-related claims arising from preexisting conditions, soil and water management and voluntary site investigations are commonplace.

PFAS restrictions are now encountered on construction-related programs depending on the contractor’s exposure.