State of the Insurance Market:
2025 Outlook

Environmental

The environmental insurance market remains competitive, with new carriers entering the marketplace. The new carriers are aggressively pursuing new opportunities, which require incumbent carriers to be more competitive to compete with new competition. The new carriers are offering aggressive terms and conditions to build market share quickly and establish a prominent place in the environmental space. With all carriers, favorable terms and conditions can be obtained when presented with critical environmental assessment reports.

Environmental carriers remain cautious when there could be per- and polyfluoroalkyl compounds (PFAS) present. With established federal and state guidelines, insurance carriers are asking what due diligence has been performed around PFAS before they consider offering coverage. Regulators and law firms are now focused on ethylene oxide (EtO) in the healthcare industry. The product has been known to cause numerous health issues, including cancer.

Pricing has been competitive with the entrance of new carriers, and ten-year policy terms are still readily available. Environmental liability is a line of coverage that should no longer be ignored. Carriers report an increase in claims expenses, mainly due to increased social media coverage, aggressive law firms, emerging issues and social inflation. Conditions such as mold, indoor air, legionella, and weather-related events have also been trending up. PFAS and EtO are expected to impact claims activity around environmental insurance due to the growing scrutiny by regulatory agencies.

Companies need to identify potential environmental risks that could impact their operations and balance sheets. Environmental insurance should be part of your risk management strategy in 2025 and beyond. It could be the largest liability because of strict joint and several liability statutes if brought into an environmental claim.

Market Conditions

 

Last year, claims involving indoor air quality and mold were on the rise. For 2025, some carriers are pulling back from or limiting mold coverage on hospitality risk due to the rise in claims activity. It is expected that claims will continue to rise in 2026 even if federal enforcement is tempered, as individual states may strictly enforce regulations.

The U.S. Environmental Protection Agency (EPA) announced on March 14, 2024, the final amendments to the National Emission Standards for Hazard Air Pollutants (NESHAP). In April 2025, the EPA announced the final rules regulating and reducing the impacts on air emissions under the Clean Air Act. The driving force behind the legislation was to reduce long-term medical effects from the use of EtO.

Coverage Considerations

 

Environmental carriers continue to offer coverage for PFAS for those organizations who have performed due diligence and determined they are not impacted with PFAS or have quantified the risk associated with the compounds. Coverage offerings may vary by carrier based upon their appetite for the risk. Underwriters fully need to understand the risks before offering PFAS coverage.

Settlements by DuPont, Chemours, and Corteva will be used to cover the cost of PFAS remediation and monitoring of public drinking water. The money will be distributed to cities and towns affected by PFAS. Whether future settlements by other manufacturers of products containing PFAS compounds will provide financial relief to private industry remains to be seen.

If PFAS has been identified in the report, it may be difficult to obtain full or partial coverage. Clients should consider other methods of protection to cover the risk if they are brought into a regulatory action or liability suit. Other alternatives to consider are occurrence general liability policies put in place pre-1986, before full pollution exclusions were added to insurance policies.

This approach may not be an option for new organizations. Another option may be self-funding through a single-purpose captive if they are brought into some regulatory action or toxic tort claim. Clients need to be prepared to address this exposure until there is more clarity around the impacts caused by PFAS and how state and federal regulators will address the concern in the future. The issue is not going away soon, and it is more likely the government will strengthen its position.

Natural disasters and weather-related events, such as floods, continue to adversely impact the insurance market. Proactively establish disaster contingency plans if your business is vulnerable.

Meticulous environmental due diligence is vital in mergers and acquisitions. Identify potential environmental risks in target companies to prevent surprises and strengthen your risk management strategies. Consider the use of environmental insurance products to mitigate risk.

Environmental Rate Forecast

 
Rate Forecast
Environmental: -5% to +5%*
*Market remains soft and extremely competitive on new placements. Renewals can expect on average –5% to +5% based upon policy term and complexity of risk.

Recommendations

 
Checkmark-2024-SOTM

Conduct a comprehensive risk review to identify potential environmental exposures in operations, products, and locations. Understanding these risks allows proactive risk management.

Checkmark-2024-SOTM

Engage with insurance brokers specializing in environmental insurance to ensure adequate and tailored coverage. Policy language should be designed to address operational risks and contractual obligations.

Checkmark-2024-SOTM

Capitalize on specialized environmental programs offered by reputable carriers. These programs provide coverage enhancements and competitive premiums, especially for contractors involved in construction projects.

Checkmark-2024-SOTM

Establish a clear exit strategy before starting remediation projects. Understanding potential hurdles and regulatory re-opener actions will help plan and mitigate long-term liabilities. Consider the use of cost cap coverage to fence in unexpected remediation cost overruns.

Checkmark-2024-SOTM

Promote environmental awareness within the organization. Implement safety, preventative and emergency response procedures, and environmental risk management practices to minimize potential liabilities.

Environmental-Recommendations-SOTM-2024
Environmental-Callout-SOTM-2024

Connect with our
Environmental Practice

Three-Person-Business-Meeting-1250

With solutions that cover nearly every possibility, we can create a plan that protects you from risks like pollution, contamination, and more.

Find out how we can help >>

Environmental liability is complex and can touch every aspect of your business – from people to property and a whole range of liability risks.

Learn More

Download the Report

 

Our industry and product line specialists have collaborated to provide an update on current trends and market conditions.

We invite you to explore their insights by downloading our latest State of the Insurance Market Report.

Download the Report

State of the Insurance Market Report

 

Explore the Report

Industries

Insurance experts in our industry specialty practices work with our clients and are in the market placing insurance coverage every day. Review their outlook for your industry.

Business Solutions

The experts that support key business product lines across our organization are in the market placing insurance coverage every day. Take a look at their observations on the insurance landscape.

Explore More

Browse other areas within our State of the Insurance Market Report.

The contents of this report are for general informational purposes only and Risk Strategies Company makes no representation or warranty of any kind, express or implied, regarding the accuracy or completeness of any information contained herein. Any recommendations contained herein are intended to provide insight based on currently available information for consideration and should be vetted against applicable legal and business needs before application to a specific client.