Insurance Marketplace Realities: Environmental

2018 Spring Update on Commercial Insurance in North America

April 12, 2018

Price prediction

  Trend Range
Contractors pollution liability: No change or slightly up Flat to +10%
Site pollution liability (PLL/EIL): Up +10% to +20%
Combined environmental + casualty and professional: Up +10% to +20%

Key takeaway

Buyers will need to take a fresh look at the marketplace to assess the most appropriate options for their risk profile.

The market turn is a result of loss-driven reductions in underwriting appetite for indoor air quality (IAQ) risks and known conditions, as well as insurers’ continuous preference for shorter policy terms.

The environmental insurance market is experiencing its first hardening in over a decade.

  • Several years of mounting losses have led carriers to either exclude coverage for IAQ exposures, such as mold and legionella in habitational classes of business, or to severely restrict their offerings on a named-peril or time-element basis, or with per-door/bed deductibles.
  • As we enter the third year of AIG site pollution non-renewals, insurers who were eager to grab a share of the AIG Pollution Legal Liability business have begun to take a more cautious approach regarding known conditions and policy duration. This caution is based on their assessments of this portfolio’s performance for the first two years since AIG’s exit.
  • Many carriers who worked exclusively with either retail brokers or wholesale brokers have moved to simultaneously work with both distribution channels to try to increase their market share.