Greenwashing, mine sites and clean energy: Canada's shifting environmental risk

00:00 - Amanda Modica
For environmental insurance remains quite rare on a mining exposure.

00:00 - Justin Perry
The historic risk is what it is.

00:00 - Aaron Weinstock
As brokers for environmental risk, we have an easier job than the reps and warranties guys do.

00:00 - Shawn Alavi
You're injecting a pollutant into the atmosphere, uh, regardless of, you know, what the use or the operation is of this of these new and emerging industries.

00:00 - [music]

00:00 - Paul Lucas
Hello everyone. Welcome to our latest environmental insurance power panel here at Insurance Business Canada. Now, in this edition, we'll be looking at a new important bill, legacy mine sites, greenwashing, and more. And to take us through it, we welcome Amanda Modica, Director, Head of Environmental and Professional Broking at Willis, Justin Perry, Senior Vice President and National Practice Leader, Environmental Risk Solutions at Aon, Aaron Weinstock, National Practice Leader, Environmental at BFL Canada, and Shawn Alavi, Senior Vice President, Complex Risk Environmental Practice Leader at Hub International. Uh, so to everyone, I said we'd start by talking about an important new bill, a bill C-15, which received royal assent in March 2026. It relaxed the internationally recognized methodology test for environmental marketing claims, but kept the underlying greenwashing prohibition in place and only narrowed private rights of action. So, uh, with Keurig's $3 million penalty for misleading recycling claims as a a cautionary precedent, so what is greenwashing becoming a mainstream environmental liability and D&O concern for commercial clients, or is it still treated more as a marketing compliance issue? Uh, Amanda, what are your thoughts?

01:29 - Amanda Modica
A loaded question, Paul. Thank you. Um, greenwashing, I think is really still more a of a management or a D&O related issue. From an environmental insurance perspective, it's not directly tied to our traditional policies because our policies do need to be triggered by a pollution condition. Some of our insurers, however, do have policy extensions for what they call green building materials. So, small sublimits under the policy for materials or products that are either lead certified or environmentally preferable, energy efficient, um when there is a claim that occurs, uh there's a small sublimit that we can use those green building materials. But again, the greenwashing is still more of a, do you know, management liability issue.

02:01 - Paul Lucas
Yeah, would you agree with that, Justin? This is really about representation here, is it?

02:01 - Justin Perry
Yes, absolutely. I I think insurers are going to be cautious around how they respond to fines and penalties for environmental matters and really tightening up their forms so that it responds to an environmental matter, not a greenwashing, which is a representation issue. Uh so, I think that that's something to keep in mind uh if the claims do start to present themeselves.

02:32 - Paul Lucas
Okay. And Aaron, with greenwashing scrutiny and contamination risk both now feeding into deal risk, are we seeing more use of environmental representations and warranties insurance in Canadian M&A transactions or is that still a niche product here?

03:05 - Aaron Weinstock
Yeah, for sure, Paul. Uh we are definitely seeing more uh transactional reps and warranties policies in the market. And when it comes to environmental risk, it deals more with um contamination than greenwashing. You know, not long ago, the reps and warranties markets wouldn't really touch environmental risk. And then the market shifted over the couple years and they started covering it more and more often. You know, the environmental coverage under reps and warranties is sort of deal-by-deal, insurer-by-insurer. Um it's and uh you know, every everyone is unique. RWI is not really a niche product, I would say, but it's certainly uh not mainstream and is critical to get a transaction done. Where we sort of come in as environmental brokers is when the reps and warranties insurance will exclude environmental risk or where there's less synthetic deductible or where there is a requirement that underlying environmental coverage something like that. And when that happens environmental insurance come becomes a really critical issue getting a deal done. As brokers for environmental risk we have the easier job than the reps of warranty guys do. They I don't know how they do what they do but certainly our contribution to the deal is critical in getting it over the line.

03:54 - Paul Lucas
So perhaps not a niche product anymore but not a mainstream one either. Would you agree with that Sean?

04:18 - Shawn Alavi
Yeah, I completely agree Paul. I think the element of these policies is pivotal in terms of getting a transaction done. You know, the reason that a lot of people look for Sue is related to the known environmental conditions and seeing how much liability they can take off or how exposed people are to their balance sheet. So I think for some people on these particular deals it means that they might need to walk away from a deal and that's not always easy because you know, it doesn't meet the interest of both parties. So as much as there is that product out there the quality of information that goes alongside that is equally important.

04:48 - Paul Lucas
Well speaking of quality information, I know we've got a real expert in the mine field on the call with us today. So Justin, I'm going to put you on the spot if you don't mind. We are seeing of course legacy mine sites across Canada increasingly being reclassified from pure environmental liabilities into critical mineral and in clean energy assets supported of course by reformed provincial mine closure regimes and phased financial assurance requirements. So is that shift changing how insurers approach historic contamination risk on those sites Justin?

05:15 - Justin Perry
I don't believe so. I think what is fundamentally changing is how the regulators are dealing with the historical matters and any form of indemnification that they're providing or um you know, we'll say uh how much they're letting the mine the new mine operator operate without the fear of repercussion from the past. Um fundamentally, uh so the risks are I would say that the same as they have been. The historical risk is what it is. Uh the new operators are uh following the regulations and have to understand what's there. Uh I think the fundamental shift from the insurance perspective is that there are now more uh mine operators that are coming back into business. So it is creating a new economy, a new business, a new interest, or renewed interest. So it is going to lead to more availability of insurance.

06:25 - Paul Lucas
So it sounds like a little bit more like a narrative change, perhaps, Aaron.

06:25 - Aaron Weinstock
Yeah, for sure. I think from an environmental insurance perspective, not a lot has changed other than the narrative. Running the sites, you know, full environmental liability insurance for mines is still somewhat rare, um and the coverage is often dealt with under other lines of insurance. And ultimately, at the end of the day, for environmental underwriters, environmental risk from mines is viewed as very challenging. Legacy mine sites, even more so when there's a long history and there's tailing dams and dumps and rail lines and all that good stuff. Uh but ultimately, for underwriters, it comes down to the you know, the basics of what the coverage is for, and it's for you know, it's covering off the risk of contamination to soil and groundwater and surface water, and you know, ultimately, which stakeholders can be affected by pollution in this situation.

07:13 - Paul Lucas
And Andrew, can you just talk to us a little bit about the community aspect here?

07:13 - Shawn Alavi
Yeah, the there's definitely a reframing from all parties, I think. And I think the big piece here is that obviously the municipal, federal, provincial governments, and how they are involved in this process, and you know, what the buy-in is from the community. Usually, when you're looking at these mine sites or these legacy mine sites, they're sitting on large parcels of land. Um and I think people are obviously very open to the idea of repurposing that land and using it for something that's more practical, at least if they can benefit the community as a whole. So, um you know, kind of going back to what Justin said, the indemnity piece is the big piece um because a lot of new mine owners or mine site owners are not going to want to take that liability in totality, but you need a company there that has that financial strength that kind of withhold any potential losses or any kind of scrutiny around the new operation that's taking place. So, um it's a it's a collective effort for the most part.

08:05 - Paul Lucas
Yeah, and Amanda, just talk to us about what you're seeing in terms of coverage with these changes.

08:05 - Amanda Modica
Yeah, well, Aaron mentioned that full environmental insurance remains quite rare on a mining exposure. What we do generally see in the industry is the mining companies relying heavily on their S&A or sudden and accidental pollution extensions under their GL programs. It's traditionally been quite pricing-wise. Um what we are starting to see is a increased consideration for using a standalone pollution placement to provide that ground-up cover for the um program. So, whether it's still S&A or a time element basis under a standalone program, there is generally broader coverage than a standard GL S&A extension and a little bit of an element of first-party cover as well. So, just a greater consideration for a restructuring of the program and where we are actually getting that pollution cover from.

09:12 - Paul Lucas
And of course, environmental liability insurance is reportedly reaching well beyond its traditional heavy industry base now into real estate developers, contractors, commercial landlords who perhaps never bought this coverage before. Um Shawn, are you seeing that same expansion? Indeed, is the product evolving fast enough for buyers who perhaps don't yet understand their exposure.

09:40 - Shawn Alavi
Uh yeah, I think it is all obviously we're seeing an uptick in in purchasers and companies investing in this liability coverage. I will say that a lot of these companies um need to be further educated. So, whether that be explaining the products to them ensuring explaining ensuring agreements or even sharing claims examples for, you know, some of their competitors or relevant um stakeholders in their industry. I think as a really important piece because they need to understand what the differences are between the different lines of coverages that they buy. I think what's kind of surprised me in the short term is around leased assets. We're seeing a lot more um clients look at protecting their liabilities for past liabilities on a site where they don't have ownership stake in it. And you know, this is obviously a very technical underwrite because it requires a market to provide excess of indemnity over any kind of landlord that's providing that and you know, there's an element of like underwriting the financial stability of that landlord and site owner. Um and you know, that just speaks to the volumes of how people are trying to safeguard their business. So, I think all in all we're seeing an uptick and I think it's being more fiscally responsible around your business.

10:39 - Paul Lucas
Okay. And where is the bar set here, Justin?

11:14 - Justin Perry
Yeah, so I think um what was an insurable or a practical a practically insurable pollution condition um or exposure has now come down. So, it's no longer heavy industry, it's no longer, you know, heavy pollution sources. Now, it's just land operation, land ownership uh is the bar. So, if you operate on land or you perform work on land or even on water, there is an environmental insurance product available. Um certain lenders and certain counterparties are interested in securing, um, you know, their investment or their loan or whatever it is in the asset. So, we are seeing a greater push, uh, for environmental insurance. So, there's an acceleration.

11:50 - Paul Lucas
Okay, so an acceleration, says Justin, but is that interest across the board here, Aaron?

11:50 - Aaron Weinstock
Yeah, you know, there really is a dichotomy of clients that we see who love environmental insurance. They see a great value in it and others who just, you know, seem a bit seem to be a bit apprehensive or are not interested. You know, environmental risk is really a low frequency, high severity type loss. Um, fundamentally comes down to, um, education. And I think one of the problems is that clients hear environmental liability insurance and they think about third-party claims from neighbors or from regulators, that sort of thing, which in Canada is generally quite rare. Not totally rare, but it's quite rare. And so, really when they understand that there's value in having first-party discovery coverage for putting by you, you know, they seem that seems to resonate with them as well as having coverage for things like mold exposure or other things like asbestos, which would not normally be thought of, uh, in terms of traditional understandings of insurance. So, you know, once they understand that the coverage goes beyond what they what they might expect based on, you know, just the title of a of a policy, uh, I think that's really where we've had some success in in working with our clients to add lines of coverage for them.

12:43 - [laughter]

12:43 - Paul Lucas
One more time. Um, and just to go back to the key question, if I can, Amanda, just to take us full circle. Do you think the product is evolving fast enough or not?

13:08 - Amanda Modica
Before I get into the evolving piece, just to drive it home a little bit further with what my other panelists said, I think the education really is the biggest piece and sometimes we have those conversations around what does a pollution and how is it different than the SNA under my GL several times before something clicks and it makes sense for that client's insurance program. So, I think just continuing to have those discussions, even when you think you're repeating yourself, is super crucial to really drive home the education of what the pollution policy is covering. Is the product evolving fast enough? I think yes. I don't think we're seeing major changes to policy forms from multiple insurers, but the market is super competitive. We've chatted about it on some of our previous panels. There's a lot of capacity out there domestically and internationally, and we have a lot of new insurers popping up here in Canada. So, as a product of that market being super active, it creates a lot of flexibility for manuscripting unique coverage extensions, getting nuanced coverages, increased sub-limits, special considerations where necessary for each of our clients' unique exposures and needs. And I think that as long as the insurance or the insurer market continues to be accommodating in that respect, the pollution product as a whole will continue to evolve with our clients.

14:10 - Paul Lucas
Well, I just want to throw one final quite niche question at you if I may. As solar battery storage and carbon capture projects scale up across Canada, are underwriters treating these clean energy technologies as a genuinely new category of environmental exposure or perhaps folding them into existing renewable energy and construction wordings? So, Aaron, what are you seeing?

14:47 - Aaron Weinstock
Yeah, so what I'm seeing is that, you know, these risks are not particularly new to underwriters in this space. They've been covering this type of risk for decades, if not longer than that, right? Uh some insurers on have put in place dedicated teams to address these certain new and emerging type risks, but the products and forms are all kind of the same. Maybe there's a couple of enhancements here or there to address these risks directly. You know, ultimately like I mentioned with the legacy mine sites, the underwriters for environmental risk are focused on the risks of causing contamination to soil, groundwater, air, surface water, that sort of thing and will be impacted. There are some niche products out there for things like carbon capture credits and tax credit, that sort of thing, but that's not really environmental insurance products.

15:44 - Paul Lucas
Okay. Sean, do you think that perhaps needs to be a little bit of flexibility here?

15:44 - Shawn Alavi
Yeah, I think so. I The ultimately what Aaron's saying is spot-on. You're injecting a pollutant into the atmosphere regardless of, you know, what the use or the operation is of this of these new and emerging industries. I think what really is interesting from a market perspective is that there's a little bit of unknown around the claim scenarios. So, I think there's a there's an abundance of information that is required to better understand how the company's managing the risk and how they're calculating the environmental impacts to the environment. But ultimately markets are providing capacity. They might you know, look to reduce that capacity to provide some kind of cap, but that product is still very much available for these new industry segments and continue [clears throat] to be as we kind of build towards a more sustainable future, I think.

16:46 - Paul Lucas
And Justin, I guess this isn't really a new area of insurance as such, but perhaps something about a new economy.

17:18 - Justin Perry
Yes, absolutely. So, I think as my panelists have said, none of this is new from a pollutant and what is the pollutant or what is released. What might be new is how you package the risk because it does include other types of insurance that other lines may not be as comfortable with in a pollution context. No different than technical product liability that needs to come into the environmental market because it's not a GL fit anymore. In the well in in the carbon capture you might have to look at regulatory liability bonds that need to be issued to secure the financial element. You might have to look at control of well type of programs for any form of injection. So each of those types of insurance may be um more restrictive in this class. So the environmental markets are building packages to support the individual class, whether it's battery storage, whether it's wind farms, solar farms, carbon capture that include other elements of insurance that are better understood with the main exposure being a pollutant.

17:57 - Paul Lucas
I certainly challenged you with the questions this time around, but great thoughts across the board and indeed another brilliant panel. Remember of course that this team will be back together again one more time in 2026 and until then keep it right here on Insurance Business TV.