2026 MARKET TRENDS
Environmental
Key Takeaways
- New market entrants are driving down pricing, with some ten-year policies dropping below $100,000, though these rates may not align with long-term risk profiles
- The environmental insurance market remains soft, with renewal pricing ranging from a 3% reduction to slight increases, depending on loss history and risk factors
- Heightened public awareness and social media visibility have fueled litigation, particularly around per- and polyfluoroalkyl substances (PFAS) and ethylene oxide, leading to higher verdicts and increased regulatory scrutiny
- Ample market capacity and competitive conditions create opportunities to negotiate favorable policy terms, especially for new business placements
The environmental insurance industry is shifting as new carriers enter the market with aggressive strategies to establish themselves.
Overview
Increased competition from new market entrants is causing a reduction in premiums. While rates are currently stable, the industry is seeing a rise in nuclear verdicts, particularly those involving healthcare exposures and ethylene oxide. Additionally, construction defect claims continue to grow, creating heightened friction between developers, owners and contractors across all tiered contractors. Some carriers are implementing stricter underwriting guidelines in response to the uptick in mold and legionella-related claims and the continued emergence of PFAS regulations. Conversely, other carriers are softening their underwriting positions in an effort to remain competitive.
Market Conditions
The environmental insurance industry is shifting as new carriers enter the market with aggressive strategies to establish themselves. Facing significant upfront investments, these entrants prioritize rapid market penetration, reflected in their willingness to assume higher risks and offer aggressively low pricing. Without an established loss history, they can provide favorable terms that seasoned carriers may find unsustainable.
While historic low pricing and unprecedented multi-year policy rates benefit buyers, concerns about long-term risk remain. In addition to great market options, the environmental insurance market is undergoing significant shifts, driven by competitive pricing, evolving regulations and heightened litigation risks.
Historic low pricing:
Pricing for new business has dropped to record lows, with ten-year policies sometimes priced below $100,000
Renewal business trends:
Loss-free risks see pricing reductions averaging 3% to flat, while accounts with loss history may experience increases of up to 3% or more, depending on risk factors
Soft market outlook:
The current soft market conditions are expected to persist unless significant environmental events or emerging risks disrupt the landscape
Sustainability concerns:
Many carriers believe that the current pricing levels may not adequately support the long-term risk profiles of these policies, raising questions about sustainability
Rising environmental litigation:
Media coverage, social media visibility and public awareness have fueled a surge in environmental lawsuits, leading to higher verdicts across industries
Proposed changes to PFAS reporting rules:
The Environmental Protection Agency (EPA) is considering narrowing PFAS reporting requirements. While these changes may ease federal reporting burdens, it’s important to note that states often impose stricter standards
Learn more about PFAS reporting rules
Impacts & Considerations
The environmental insurance market offers favorable conditions for buyers, with costs trending flat to downward and ample capacity available. This creates strong opportunities to negotiate advantageous policy terms, particularly for new business placements. However, emerging risks, heightened litigation and evolving regulations underscore the importance of incorporating environmental insurance into a comprehensive risk management strategy. To leverage this buyer’s market and address immediate and long-term risks, the following measures should be considered:
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