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Survey Report

Insurance Marketplace Realities 2023 – Environmental

December 1, 2022

The 2023 environmental marketplace should experience steady yet cautious growth.
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Rate predictions: Environmental
  Trend Range
Contractors’ pollution liability (CPL) Increase (Purple triangle pointing up) +5% to +10%
Site pollution liability (PLL/EIL) Increase (Purple triangle pointing up) +5% to +15%
Combined environmental + casualty/professional/excess Increase (Purple triangle pointing up) +5% to +15%

Rates and markets

  • Carriers are looking to achieve effective rate increases commensurate with their loss experience and appetite across their renewal books by employing underwriting methods, such as premium increases, shorter policy terms and reduced capacity.
  • Contractors’ pollution liability programs continue to experience rate increases largely due to the market-wide performance of site pollution products, but these increases are kept in check (+5% to +10%) by markets competing for this desirable line of business.
  • Site pollution continues to experience higher rate increases (+5% to +15%) resulting from increased claim activity, remediation costs (fuel and labor), and regulatory uncertainty from emerging exposures (i.e., PFAS).
  • Combined environmental + casualty/professional/excess programs have experienced a modest reduction (+5% to +15%) in their rate increases, keeping in line with the slight softening of the casualty market.

What’s new?

  • ESG: The role of environmental insurance as a tool to address ESG-related matters continues to be contemplated and discussed with more vigor as regulatory disclosure rules in the U.S. and the rest of the world around ESG are promulgated.
  • Climate: Environmental insurers continue to evaluate their books of business for insureds contributing to climate change. Those insureds are seeing a decline in available markets as well as higher rate increases as a result.
  • Environmental justice: We are seeing increased regulatory enforcement of certain industries and projects located in communities that are the focus of state and federal environmental justice initiatives. Regulators are filing lawsuits against these companies to enforce cleanup mandates, as well as for natural resource damages.

Exposure spotlight

  • PFAS: As predicted, per- and polyfluoroalkyl substance (PFAS) exposures are being faced by standard lines insurance markets for all lines of coverage, including property and products liability. As environmental regulators are considering the classification of these chemicals as hazardous substances, researchers are racing to develop potential remedial solutions. Meanwhile, carriers are all but eliminating coverage for PFAS on site pollution (and increasingly on contractors’ pollution) programs because of increased activity from environmental regulators and third-party lawsuits.
  • IAQ (indoor air quality): IAQ coverage for mold and Legionella has become increasingly subject to sublimits, higher retentions and per-bed/door retentions for healthcare and residential exposures.
  • Redevelopment: Claim activity related to redevelopment of brownfield properties continues — although carriers try to limit exposure by adding exclusions or coverage restrictions associated with soil management, historic fill, dewatering and voluntary site investigations.
  • Stormwater: We are also seeing increased contractors’ pollution and professional liability claim activity relating to excessive siltation and stormwater run-off from construction sites, with claims brought by project owners, citizen action groups and regulatory agencies.

Disclaimer

Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).

Contact

Head of Environmental Broking, WTW

Brian is the Head of Environmental Broking in North America for WTW. Drawing from over 30 years of environmental consulting, underwriting and brokerage experience, he leads the insurance industry’s premier team of environmental specialty brokers who negotiate over $250m in premium placements annually.


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