One of the most important emerging environmental risks in the industry is climate change and greenhouse gases, says Daniel Orsic (pictured), senior vice president at Aspen Insurance.

“I recently toured a landfill and was really interested in learning how to capture the gases that escape from the landfill as the materials degrade,” he said. “By converting these captured gases into energy that landfills can then sell, they are able to invest more in additional programs to operate in a more sustainable manner.”

But not all companies are rushing to embrace this kind of innovation. As the convergence of gas-fired power systems and new environmental technologies becomes more common, upfront financial investment is required, says Orsek. But despite the upfront costs, the long-term benefits of reduced risk and increased potential profits make it worthwhile for many industries.

For insurers, cleaner, more efficient companies are naturally a welcome development. Companies that take steps to reduce their environmental impact reduce the likelihood of claims under their environmental insurance policies. Whether it’s preventing pollutants from leaking into rivers or capturing greenhouse gas emissions, these innovations can reduce the likelihood of costly claims.

However, technology alone does not lead to higher insurance premiums.

Navigating the regulatory landscape is another major challenge for insurers, especially when it comes to the evolving nature of environmental regulations surrounding PFAS (perfluoroalkyl and polyfluoroalkyl substances). Increased awareness has led to stricter regulations and, therefore, more challenges for insurers.

“Ten years ago, no one was really thinking about PFAS.”

In April, the EPA designated two widely used PFAS as hazardous substances under the Superfund Act, improving transparency and accountability for cleaning up PFAS contamination in communities. This action addressed PFA and PFOS contamination by enabling investigation and cleanup of these harmful chemicals and ensuring reporting of leaks, spills, and other releases.

“Ten years ago, no one really thought about PFAS, but today it’s in the news all the time,” Orsik said. “The challenge I face as an insurance writer is how can we help the insured who are exposed, and at the same time not interfere with the claim?”

To address these challenges, Aspen takes a tailored approach to each insured, rather than imposing broad exclusions. “We want to treat customers individually, not generically,” Orsek said. “There are companies that really want to operate responsibly, so we try to write each insured individually and provide them with the right amount of coverage, while not putting risks on the books that would hurt our bottom line.”

Aspen takes sustainability seriously.

Some clients may face higher retention rates for PFAS claims, while others may be offered full coverage. It’s a matter of balancing the need to protect Aspen’s book of business with the desire to provide comprehensive coverage for its clients. Despite the challenges posed by new regulations and emerging risks, Orseck remains optimistic about the future of environmental insurance with technological advances already transforming the industry. For example, smokestacks that once emitted harmful pollutants now have scrubbers that reduce emissions.

Aspen’s commitment to sustainability is a core aspect of its corporate ethos, and Orsek emphasized how this impacts its partnerships and operational approach.

“Aspen takes sustainability seriously,” he said. “Our social responsibility and sustainability teams work hard to create partnerships with entities that create positive impacts in our communities.”

This approach is not limited to the company’s internal practices; it shapes how Orsek evaluates potential clients.

“Do our customers take these issues seriously? Are they aware of how their operations impact the environment and the communities in which they operate?” he said.

Environmental insurance is an “invaluable tool”

This goes hand in hand with the importance of educating clients, especially in such a specialized field. He believes that knowledge is power, and the more brokers understand the nuances of environmental insurance, the better able they are to serve their clients.

“Many of the agencies I work with have an in-house environmental team, and they understand the rates, limits, risk management and different policies offered. However, in cases where client education is necessary, I will explain policy models, how the EIL policy might respond to a situation, potential coverage limitations, claim examples and what we need on the application in order to provide the terms.”

Ultimately, Orsik’s work goes beyond just underwriting; he sees a social benefit in what he does.

“What I love about working in environmental insurance is that it has become an invaluable tool that not only protects clients from financial damage resulting from an accident, but also promotes responsible environmental stewardship through strategic risk management,” Orsic said.

“For example, it has been amazing to watch the evolution of environmental liability insurance coverage since I began underwriting. What started as a policy to fill the gap left by general liability policies after the implementation of the full pollution exclusion has since grown to provide coverage for contractors’ pollution, occupational pollution, transportation, storage tank pollution, and much more. Through EIL, the cleanup and redevelopment of contaminated sites can be facilitated, allowing the insured, the land and the surrounding community to recover faster. It is exciting to see this market evolve through innovation and to be part of an industry that can help drive some positive change for a more sustainable planet.”