The Evolution of Environmental Liability Insurance

The past 15 – 20 years have seen drastic changes in the environmental market in the UK.

In the 1990s there were a mere handful of markets which have grown to around 20 today. The number of specialists throughout the UK, just 15 years ago, meant that the world of environmental business was constricted to maybe 10-20 environmental impairment liability (EIL) brokers. Over time, roles have changed and adapted. While specialist EIL brokers may have fallen, there has been an increase in brokers touching base in environmental insurance, alongside other mainstream specialists such as property and casualty submissions. The market has shifted away from the merger and acquisition (M&A) focus, towards more closing protection letter (CPL) policies for project-specific contractors, scheme business and annually renewable policies.

The business of environmental insurance continually evolves as the focus on environmental impacts develops. Land Based Underwriters can provide the information you need to help your clients in making the right choices for their businesses.

How has Environmental Insurance Changed & What are the Emerging Risks? 

As with most things, regulations and licensing requirements have tightened up within environmental liability. This has therefore had a positive effect on driving developments in environmental management. Within the farming and agricultural community, the predominant focus of concern is on the handling and storage of potentially hazardous pollutants such as chemicals or waste. Accidental or not, even within an incredibly well-managed store, environmental pollution can still occur, leading to potentially dangerous incidents. This could be at the hands of vandals, human error, or accidental fire, to name just a few possible catalysts.

One of the emerging issues to have come to life in recent years is, if an existing agricultural infrastructure has been purchased or leased (brownfield asset), the polluter pays principle remains. This often requires tracing any incidents back to the initial cause/owner. However, if the original polluter cannot be found, the current owner would then become liable. These situations can become messy and lend themselves to increased coverage from an environmental insurance perspective to cover any possible hidden hazards. For example, in more recent years, developers have formed an increased interest in ensuring their company reputation isn’t tarnished by pollutant-based damages and have therefore sought out tailored environmental impairment liability policies to cover such eventualities.

Our Forecast for Environmental Business in the UK

Overall, the outlook for environmental business in the UK is positive. Unsurprisingly, the world of environmental liability will continue to expand. Where public liability insurance policies can provide extensive coverage, there are holes in these policies which can be plugged by tailored environmental impairment liability insurance. Awareness of these gaps, such as no own-site clean-up costs, and no cover for sudden and gradual pollution, is increasing. The value of environmental insurance only intensifies as legislation develops and tightens. The future of farming will undoubtedly focus heavily on environmental damage and pollution events, so ensuring you have the correct level of cover is essential. LBU is here to help EIL brokers; our specialist team can tailor policies to your circumstances. 

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We know that looking into the specifics of environmental impairment liability insurance can be a little tiresome, so get in touch today to discover our comprehensive insurance cover and get an instant online quote to protect your clients’ businesses.