As the world continues to confront mounting environmental challenges, the insurance industry is evolving in response. With 2025 on the horizon, environmental risks—ranging from climate change to emerging pollutants—are becoming more complex, creating new opportunities and challenges for insurers.
From rising interest in carbon sequestration coverage to underwriting concerns around PFAS, Canaan Crouch (pictured), EVP at Jencap Specialty Insurance Services, environmental and energy division, shared insights on the trends that shaped the environmental insurance market this year and provided a glimpse into what to expect in the coming year.
“PFAS continue to be a challenging issue in the environmental insurance landscape,” confirmed Crouch.
PFAS (per- and polyfluoroalkyl substances) are a group of chemicals used in various products for their water- and stain-resistant properties, but their persistence in the environment has raised health and contamination concerns.
“While some carriers are taking a more measured approach - underwriting to the exposure and offering some coverage for PFAs - others are taking a very firm approach, opting not to take on any PFAS exposure at all. This divergence in strategy reflects the broader uncertainty surrounding these compounds, as insurers navigate the complexities of addressing long-term environmental risks.”
Despite this hesitancy, Crouch noted that the broader market is seeing an influx of new entrants offering increased capacity, with some of these players offering highly innovative solutions for developing lines like carbon sequestration—a coverage Crouch says could see continued interest in the coming year.
“When people talk about carbon sequestration, they're referring to the process of capturing excess carbon from the atmosphere,” explained Crouch. By doing so, this process can help reduce greenhouse gas emissions and mitigate climate change.
As Crouch noted, this emerging coverage area is gaining traction as more industries, particularly those in high-emission sectors like ethanol and coal-fired power plants, seek to reduce their carbon footprints while capitalizing on government incentives, such as tax credits.
Carbon capture and storage insurance can cover risks including:
What is driving the ability of new market entrants to provide increased capacity and innovative coverage options, such as carbon sequestration? According to Crouch, this can be attributed to two key trends: the maturation of the environmental insurance industry and a more seasoned workforce.
“Professionals like myself, who have become seasoned in their careers, are now ready to take on larger responsibilities, including running their own books of business, having witnessed how profitable certain lines of coverage in environmental insurance have been,” he said.
However, Crouch acknowledged that this shift brings increased pressure. With a highly skilled, senior workforce, "the cost structure of underwriting firms can become quite high, and the incentive to generate revenue is intense," he noted. As pricing approaches a ceiling, environmental insurers are finding that they can no longer solely rely on price competition. Instead, insurers are focusing on competing through expanded coverage options and by taking on more risk to stay relevant and profitable.
As Crouch confirmed, “People are competing through coverage extensions versus just price, as there’s only so far you can go with pricing before you're not making money.” This strategy shift reflects the industry's evolution from price-based competition to a more nuanced focus on value-added solutions, which is expected to continue driving the market in the coming year.
