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Survey Report

Construction Marketplace Realities 2019 – Environmental Liability

Pensions Corporate Consulting|Environmental|Insurance Consulting and Technology
N/A

March 29, 2019

Fueled by over 40 environmental carriers competing in this space, market conditions are considered “soft” inspiring many to expand coverage and compete on price.

Rate predictions

  Trend Range
Environmental/Pollution Rate Forecast: No change or slightly up Flat to +10%

Key takeaway

Fueled by over 40 environmental carriers competing in this space, market conditions are considered “soft” inspiring many to expand coverage and compete on price.

With environmental insurance claims on the rise and the marketplace still offering ample carrier choice and appetite, insuring a business from a possible pollution condition at a job site is now seen as a business essential for all types and sizes of construction contractors and projects. The construction industry has experienced elevated exposures for both project/job site owners as well as for the contractor actually performing the work. This is largely due to differences in risk management perspectives, appetites and related controls from one project to another and an increase in claims/loss activity (such as those associated with pollution exposures during work and after completion, indoor air quality, Legionella, mold- and water-related issues, emergency remediation expenses, contractor owned locations and “beyond the boundaries” scenarios, transportation and disposal of construction debris).

Being fueled by more than 40 environmental carriers competing for business in this space, market conditions are still generally considered “soft” which has inspired many to differentiate themselves by expanding coverage and competing on price in some instances. Carriers have also been thinking more holistically and strategically by joining forces with other lines of business to offer quotes for builder’s risk, professional, wrap-up, or even blanket practice programs where appropriate. In addition, site pollution and contractors pollution wrap-up products are being coordinated to address both pre-existing and construction-related exposures of project sites. In other exposure-based instances, rate predictions vary from flat to +10%, and the market is “hardening” in areas where carriers have less of an appetite and employ coverage restrictions based upon the type of work being performed, such as redevelopment projects (due to the high potential for the discovery or exacerbation of pollution conditions) and heavy habitational, hotel, hospitality and hospital risks (due to an increase in indoor air quality, mold, MRSA and Legionella-related claim activity).

The environmental insurance markets have become more adept at providing protection against the risk of uninsured or underinsured pollution losses and continue to provide viable and cost-effective insurance options and products to ensure more certainty and comfort around construction and contractor exposures.

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