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Brief History of Environmental Insurance

Environmental Impairment Liability (EIL) insurance was first introduced in the late 1970’s and continued to evolve through the 1980’s. Strict underwriting guidelines, restrictive exclusions, and the sizable premiums and deductibles of the early market caused most companies to self-insure their environmental exposures. Although many companies would have preferred to insure such risks, they felt the available coverages provided very limited protection at excessive costs.

Over the last four decades, the environmental insurance market has expanded to where insurers have introduced a broad menu of environmental options, and now provide the capacity needed to respond to a wide range of known and unknown liabilities now confronting businesses and public entities across the United States. Today, there are well over 100 different genuine environmental insurance policy forms available and the market capacity exceeds $200 million in limits of liability for a single risk.

At present, a handful of the largest insurers provide the majority share of the approximately $1.2 billion of premium in today’s market. The premium volume is expected to increase at an annual rate of 20 to 25 percent. In spite of the projected growth in gross written premiums, insurance companies will continue to compete aggressively for market share, in terms of price, rate, and breadth of coverage.