Environmental insurance used to be a fringe product. That’s no longer the case.
“We’re seeing a real shift in awareness,” said Andrew de Ruiter (pictured), president and CEO of TerrAssure Underwriting Solutions. “More contracts now require pollution coverage… The updated CCDC 41, for example, has made CPL a must-have on many jobs, bringing a lot of new brokers and clients into this space for the first time.”
Contractual obligations aside, businesses are facing increased regulatory scrutiny and greater public awareness of environmental risks. That has pushed companies – from contractors to developers – to reassess their exposure. “Clients are asking, ‘What happens if there’s a spill? Are we actually covered?’” said de Ruiter. “And the reality is, most traditional CGL policies won’t respond in a pollution scenario.”
That coverage gap has caught many businesses off guard. And for brokers, the challenge is often explaining why that added premium matters – before a costly loss brings the lesson home.
The turning point for many clients came with a better understanding of the cost curve. “That phrase – ‘low frequency, high severity’ – really gets people’s attention,” said de Ruiter.
Pollution events aren’t daily, but when they hit, they’re expensive. “Cleanup costs alone can be huge, but then you add in legal costs, regulatory fines, and the reputational fallout,” he said. “It adds up fast.”
Technical definitions tend to fall flat with clients. Instead, de Ruiter relies on real-world examples. “You can talk about exclusions and wordings all day, but it’s the claims examples that make it click,” he said. “When I share a story, like a small chemical spill that ended up costing hundreds of thousands, clients and brokers start to picture themselves in that situation.”
The rise in contractual requirements has shifted underwriting practices. “We’re seeing more bundled policies that combine CPL or Site Pollution with CGL, or even E&O,” said de Ruiter. That bundling simplifies the placement process for brokers while helping clients meet contractual thresholds.
But the influx of new market entrants hasn’t all been positive. “We’ve also seen some markets jump in without the depth of experience this line really needs,” he said. That inexperience leads to underpricing and policies with inconsistent or unclear wordings – problems that only surface when it’s time to file a claim.
“A fast quote is great,” said de Ruiter, “but a solid policy that responds when it matters is what clients will remember.”
One of the most overlooked challenges is the inconsistency across jurisdictions. “We’ve seen specific municipalities making it a contractual requirement on municipal projects,” he said, pointing to $5 million CPL requirements that can’t be satisfied with a basic add-on to a general liability policy.
But in other regions, vague language allows brokers to check the box without truly protecting the client. “There’s this gray area or ambiguity where the brokers can get away with just providing an S&A coverage under the GL at specific limits,” said de Ruiter. “That project might need that standalone pollution policy… or it might not. Some might be so low hazard that you could get away with it. But many can’t.”
That micro-level variation creates added pressure on brokers to understand the difference between contract compliance and actual protection. “It’s almost on us as experts in this segment… to educate the brokers more on understanding the importance of pollution liability policies,” he said.
TerrAssure’s approach to underwriting includes tech, but not at the expense of judgment. “We’re trying to use technology more… creating automation within the systems and allowing different systems to communicate with each other,” said de Ruiter. “AI is great. Everyone’s talking about AI, but we’re not there yet.”
For now, the tools that matter are those that simplify the underwriting process for brokers – improving turnaround, submissions, and clarity.
De Ruiter doesn’t expect the Canadian market to stay insulated from what’s unfolding in the US. “They’re kind of two to three years ahead of us,” he said. “To see what’s going on down there is just telling the future of what we’re going to have here in Canada. It’s a little scary, for sure.”
He urged brokers to get ahead of those shifts. “We want brokers to feel confident offering environmental coverage, even if they’re new to it,” he said. “And we want clients to walk away actually understanding what they’re buying.”
