The liability insurance market for environmental and construction risks is likely to see increased claims activity in 2024 due to the sustained increase in social inflation combined with an increasingly savvy plaintiff’s bar, according to a report from RT Specialty.

RT Specialty’s Environmental and Construction Professional (RT ECP) team has released its 2024 Market Update, providing insights into the trends and expectations for the environmental, environmental casualty, and construction-related professional liability insurance lines. The annual report aims to help businesses navigate industry challenges and protect against potential risks that could impact their bottom line.

The ECP team forecasts that insurance buyers will see continued updated language and restrictions in terms and conditions for environmental liability coverage in the standard market policy forms. According to the report, there also will be continued erosion of limits and capacity related to project specific professional liability.

“We continue to closely monitor the marketplace and the potential availability of new coverage forms; changes to policy terms, conditions, and exclusions; and the increased scrutiny placed on specific claims areas by carriers,” the report stated.

In the Contractor’s Pollution Liability (CPL) market, capacity remained strong in 2023, with several new insurers entering the space and offering limits up to $50 million per claim/aggregate, according to the report. Rates remained competitive compared to recent five- and 10-year trends, the report said. For 2024, the RT ECP team expects expanded capacity and appetite for CPL coverage, with new market entrants and continued stabilization of rates for insureds with flat exposures and clean loss reports.

Pollution Legal Liability (PLL) continues to be a primary risk management and insurance tool for contaminated property transactions and supporting the balance sheets of large real estate assets. However, transaction volume dropped significantly in the first half of 2023, with a 40% decline in the number of deals and a 65% decline in aggregate sales volume compared to the same period in 2022, the report noted. RT ECP expects demand for transactional PLL to remain soft during the first half of 2024 due to continued inflation, along with increased underwriting scrutiny for certain exposures and classes of business.

The combined PLL (claims-made) and General Liability (occurrence) policy forms, known as GL/PLL, remain well-suited for facility-based risks with environmental exposures related to insureds’ products, sites, or processes. Despite significant rate increases over the past two years, GL/PLL carriers have been successful, with most growing significantly due to underwriting discipline. In 2024, the impacts of emerging contaminants and a push back by markets on site coverages are expected to continue, along with rate increases in excess coverage due to increased automobile rates and an uptick in GL/PLL claims.

The report also covers market outlook for other liability coverages, including: the combined Environmental Casualty Program (GL/CPL/PL); Architects and Engineer’s Professional Liability; Contractors Protective Professional liability; Owner’s Protective Professional Indemnity; and Real Estate Developers Professional Liability.

The 2024 Market Update is “intended to assist brokers and their environmental and construction clients anticipate market conditions, prepare for renewals and secure competitive risk management solutions,” said Jeff Slivka, president of RT ECP.

View the complete report on RT Specialty’s website. &

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