Environmental risks are no longer confined to oil fields and smokestacks. As environmental liability insurance stretches into new sectors, Devin Brown (pictured), vice president – specialty insurance at Vailo, says the market must adapt quickly – or risk leaving clients under protected and exposed to long-tail losses.
“We’re seeing environmental exposures touching a much broader range of businesses,” Brown said. “From smaller real estate developers to contractors and commercial landlords, these weren’t traditional buyers of environmental insurance, but they’re coming across my desk more and more.”
Historically, environmental insurance – particularly environmental impairment liability (EIL) coverage – was tailored for high-risk industries like energy, waste management, and manufacturing. But that profile is changing.
Brown sees rising demand among smaller Canadian clients, often driven by evolving contractual requirements. “Smaller projects with relatively limited environmental exposure are now more frequently being asked to provide evidence of $5 million in environmental coverage,” he said. “Although this wasn’t entirely unheard of a few years ago, the frequency and consistency of these requests have increased significantly. This trend underscores the need for specialty insurers to develop accessible, scalable solutions that address environmental risks across the full spectrum of project sizes and exposures.”
Yet these new entrants face obstacles, including dense policy language and application processes ill-suited to smaller accounts. “We’ve been slow to adapt to the middle market space,” Brown said. “Streamlining policy wordings and making applications more user-friendly is essential if we want to expand coverage adoption and protect more businesses.”
Environmental risks are anything but static. Brown emphasized the need for forward-looking underwriting models that go beyond historical loss data.
“In Canada, regulators are focusing more on contaminated sites, emissions reporting, and Indigenous land stewardship,” he said. “That means underwriters need to collaborate with environmental consultants, legal experts, and regulatory specialists to properly anticipate risks.”
These risks are evolving. A site deemed low-risk today could become problematic tomorrow due to new contaminants or climate-related events. “It’s not just about pricing the risk today,” Brown said. “You need to consider how it could evolve over 10, 20, or 30 years.”
Another major challenge is market awareness. Many clients – and even some brokers – still believe their commercial general liability (CGL) policy will respond to pollution events. That’s rarely the case.
“There are broad exclusions in most CGLs that leave significant gaps,” Brown said. “Specialty insurers need to do more to clarify the difference between environmental and general liability policies using plain language and real-world examples.”
Without that education, the consequences could be severe: underinsured clients, broker E&O exposures, and financial or reputational harm when environmental events strike.
Looking ahead, Brown sees emerging exposures in Canada’s renewable energy transition. Solar arrays, battery storage systems, and carbon capture projects bring their own suite of environmental risks.
“These technologies are positive steps, but they can introduce new liabilities – chemical leaks, groundwater contamination – that aren’t well understood yet,” he said.
Brown urged pre-emptive action. “The specialty market needs to work with engineers and scientists to develop tailored solutions now, before claims start to hit.”
While the renewable energy insurance market is growing and becoming more competitive, contractual insurance requirements across projects remain inconsistent. “Some large-scale wind and solar projects have robust insurance frameworks, but smaller or newer technologies, like carbon capture or novel battery chemistries, often lack standardized risk transfer mechanisms.”
As environmental risk spreads beyond legacy polluters, the insurance industry must evolve. That means smarter underwriting, clearer communication, and policy designs that meet the needs of both large-scale operators and small contractors. “It’s about making sure the protection we offer reflects today’s exposures – not yesterday’s,” said Brown.
