Insurance Marketplace Realities 2026 – Environmental

Despite global economic turbulence, carriers are looking to expand their appetites for environmental coverage to rival new client needs.

• Relative stability in the U.S. environmental markets toward the end of 2025 has allowed some of the carriers who were recent entries or recently realigned to expand their product offering (contractors pollution with professional, combined environmental with casualty) to match their competitors.
• As predicted, this additional capacity will contribute to downward pressure on environmental rates that were poised to increase due to the increasing cost of claims.
• 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 and other GenX chemicals looming closer, PFAS (per- and polyfluoroalkyl substances) 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 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.

The magnitude and frequency of recent environmental claims continue to shape carrier behavior and appetites.

• 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.