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Survey Report

Insurance Marketplace Realities 2021 Spring Update – Environmental

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April 21, 2021

Breakthrough innovations in environmental analytics are creating opportunities for buyers.
Rate predictions
  Trend Range
Contractors pollution liability: Neutral increase Flat to +10%
Site pollution liability (PLL/EIL): Neutral increase Flat to +15%
Combined environmental + casualty/professional: Neutral increase +5% to +15%

Key takeaway

Breakthrough innovations in environmental analytics are creating opportunities for buyers to better manage their environmental risks, enhance their insurance coverages and make risk management decisions supported by data, analytics and modeling.

An increase in M&A and construction activity rebounding from COVID-19 slowdowns and delays could herald a record year for environmental placements in 2021. Fortunately, the environmental insurance market (comprised of over 20 carriers) will be ready to meet this demand.

  • Incumbent markets will attempt to increase rates on their multiyear renewals, but increased appetites from their competition will keep premiums in check for clients with excellent loss histories. Elsewhere, modest increases (relative to other standard lines of coverage) will prevail for most products.
  • Former excess-surplus lines carriers, previously focused on distribution through wholesalers, entered the retail environmental market in 2020 and are expanding their underwriting capabilities/capacity with expectations of gaining market share in 2021.
  • Insureds who are beginning to see a softening of the property and excess casualty markets are still looking to strategically lock in multiyear operational environmental programs (i.e., two to five years, where available) to mitigate future market and regulatory uncertainty.
  • Analytical tools are being employed to visually represent a buyer’s exposure to emerging exposures, such as perfluoroalkyl/polyfluoroalkyl substances (PFAS) and glyphosate, as carriers and regulators continue to formulate their respective coverage and regulatory approaches to these chemicals.
  • The top five global risks identified by the 2020 World Economic Forum are environment-related (extreme weather events, climate change, human-made environmental disasters, biodiversity loss, natural disasters). While the current environmental insurance marketplace may address many of the resulting remediation and tort exposures associated with these events, it will take a combined effort with colleagues in parametric insurance and alternative risk transfer to develop holistic solutions that cover the other economic exposures that are currently beyond the scope of today’s marketplace.

Environmental insurance carriers continue to assess their current forms and future position relative to bacteria, viruses and communicable diseases in the wake of COVID-19.

  • As predicted, affirmative coverage for bacteria, viruses and disinfection costs has all but disappeared from site pollution forms in the wake of the COVID-19 pandemic.
  • COVID-19 and communicable disease exclusions are becoming commonplace on contractor’s pollution liability forms, although coverage for mold and Legionella remains available. Each carrier’s form needs to be evaluated for potential coverage.
  • Requests to extend or modify project-specific policies for the resumption of construction activities previously delayed by the pandemic are being met with additional scrutiny by carriers concerned with potential exposure to COVID-19 claims.

We are watching several claim trends.

  • As the U.S. EPA and state environmental agencies implement groundwater cleanup guidance for PFAS and other “emerging chemicals of concern,” insureds are experiencing increased claim activity associated with both site investigation and third-party litigation.
  • As buildings and jobsites reopen, we expect to see an increase in the number of claims involving indoor environmental perils, such as mold and Legionella bacteria.
  • Claim activity related to redevelopment of brownfield properties continues— although carriers try to limit exposure by adding exclusions associated with historic fill, dewatering and voluntary site investigations.

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 subsidiaries of Willis North America Inc., including Willis Towers Watson Northeast Inc. (in the United States) and Willis Canada, Inc.

Each applicable policy of insurance must be reviewed to determine the extent, if any, of coverage for COVID-19. Coverage may vary depending on the jurisdiction and circumstances. For global client programs it is critical to consider all local operations and how policies may or may not include COVID-19 coverage. 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 and/or other professional advisors. Some of the information in this publication may be compiled by third party sources we consider to be reliable, however we do not guarantee and are not responsible for the accuracy of such information. We assume no duty in contract, tort, or otherwise in connection with this publication and expressly disclaim, to the fullest extent permitted by law, any liability in connection with this publication. Willis Towers Watson offers insurance-related services through its appropriately licensed entities in each jurisdiction in which it operates. COVID-19 is a rapidly evolving situation and changes are occurring frequently. Willis Towers Watson does not undertake to update the information included herein after the date of publication. Accordingly, readers should be aware that certain content may have changed since the date of this publication. Please reach out to the author or your Willis Towers Watson contact for more information.

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