Environmental insurance premiums stabilise, coverage expands: Willis

Premium levels for Environmental Liability Insurance have shown signs of stabilising in the third quarter, while coverage has been enhanced and expanded, according to a Willis survey.

London Market environmental insurers were surveyed in Willis’ environmental index.

The index found that premiums for longer-term, once-off environmental insurance policies covering future claims and regulatory action arising from pre-existing contamination had continued to reduce by 20% or more over the last six months.

The broker anticipates that premium levels for this type of policy would remain largely static over the next six months.

“Our survey results bear out the stabilisation of premium levels which has been evident recently within the Environmental Insurance market. This trend presents both challenges and opportunities to environmental insurers, as competitive advantage is increasingly likely to be delivered through offering coverage enhancements, rather than solely charging a lower premium.

David Barr, environmental program director at Willis

Opinion is split amongst underwriters as to the premium trend for shorter-term renewable policies. Willis believes that this is due, in part, to the expanding range of low-cost renewable environmental insurance products. However there was a general consensus among insurers that premiums for these types of policies were also unlikely to reduce further over the next six months.

The broker’s research found that insurers are increasingly willing to offer policy enhancements, for example lower deductible (excess) levels and higher policy limits for no additional premium.

Commenting on the findings, David Barr, environmental program director at Willis said, "Our survey results bear out the stabilisation of premium levels which has been evident recently within the Environmental Insurance market. This trend presents both challenges and opportunities to environmental insurers, as competitive advantage is increasingly likely to be delivered through offering coverage enhancements, rather than solely charging a lower premium."