Premiums stabilise for environmental insurance

Willis Group Holdings conducted its quarterly Willis Environmental Index survey recently, quizzing London Market Environmental. It asks insurers about their experiences over the last three months and their expectations for the next three.

According to the survey, in the third quarter environmental liability insurance’s premium levels are showing signs of steadying. Coverage for customers has been both expanded and improved, boosting value for money.

The Index found that over the last few months substantial reductions (20% or more in some cases) have occurred for premiums for longterm one-off policies that cover claims in the future and regulatory action arising from pre-existing contamination.

The insurers questioned in the Index believed that the above insurance premiums would remain at roughly the same level in the next six months.

There is no consensus amongst underwriters about the trend for premiums that cover short-term, renewable policies. The increasing range of environmental insurance products that are inexpensive could be the reason for this lack of agreement.

There is a united opinion, however, that short-term renewable policy premiums are unlikely to fall any more in the near future.

The majority of insurers who took part in the survey held the view that environmental insurance premiums will probably not rise in cost in the immediate future.

However, carriers are exhibiting an increased willingness to offer enhancements, such as lower deductibles and higher policy limits without an increased premium.

The current soft market situation is good news for consumers who have coverage enhancements more widely available than in the past.

Willis’ environmental program director, David Barr, expressed his view that the survey’s findings show that there are both challenges and opportunities for enviromental insurers. Lower premiums are not the only means of gaining or losing competitive advantage, as new policy enhancements are ever more likely to be utilised alongside lower premiums.

Category: Insurance News