Rising Risk: The Future of Environmental Liability

Why It Matters

Rising climate litigation and tighter regulatory scrutiny are reshaping environmental liability underwriting, forcing insurers and corporates to prioritize robust ESG governance and data integrity to manage cost and coverage risks.

Key Takeaways

• Insurers tightening exclusions and adjusting terms for climate litigation risk.
• ESG coverage remains nascent; positive cover still undefined and priced variably.
• Regulatory scrutiny, especially on PFAS and disclosure, drives underwriting focus.
• Reinsurance softening may lower premiums, but case‑by‑case pricing persists.
• Board governance, data quality, and geographic risk predict liability exposure.

Summary

The panel examined the UK environmental liability market as climate‑related lawsuits surge, prompting insurers to rethink underwriting and policy wording. Participants included David Bar (Mosaic Insurance), Peter Carter (Willis), and Duncan Spencer (EDIA), who discussed how ESG litigation, activist claims, and green‑washing allegations are reshaping coverage.

Key insights revealed a trend toward tighter exclusions—particularly climate‑change litigation clauses—and more rigorous due‑diligence on clients’ ESG systems. While insurers are beginning to explore positive ESG cover, pricing and scope remain uncertain. Regulators are intensifying focus on emerging contaminants such as PFAS and on the accuracy of corporate disclosures, influencing both risk assessment and policy terms.

David noted that climate‑litigation exclusions are not yet standard in base wording, and Duncan highlighted the regulator’s evolving stance on PFAS as a market signal. Peter emphasized that boards’ governance quality, data integrity, and geographic exposure are becoming the strongest predictors of liability risk, echoing the panel’s consensus that robust internal controls are essential.

The implications are clear: insurers will likely offer lower premiums where reinsurance markets soften, but coverage breadth will stay constrained by high retentions and sub‑limits. Companies must strengthen governance, improve disclosure accuracy, and address legacy pollution to mitigate rising liability costs and secure adequate protection.

Original Description

Climate-related litigation, ESG scrutiny and greenwashing risk are reshaping the UK environmental insurance market. In this Insurance Business TV power panel, industry leaders from EDIA, Willis and Mosaic Insurance examine how insurers are tightening underwriting, refining policy wordings and responding to growing legal and regulatory pressure in 2026. Watch the full discussion for expert insight into the risks, trends and market shifts defining environmental liability coverage.