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PFAS: How 鈥淭he New Asbestos鈥 Will Affect the Insurance Industry

Dec 8, 2021

This past month, the Biden administration to regulate and reduce the use and spread of PFAS, while also doubling down on cleaning up PFAS already released into the environment. These toxic chemicals are widely used in many consumer and industrial products and are linked to numerous serious health conditions. Due to their broad use and damaging effects, PFAS pose a significant risk and liability concern for the companies associated with them and the insurance industry.聽

Some industry experts herald the growing PFAS exposure as (which represents over $16 billion in claims and over $11 billion in losses for property and casualty insurers over the past 5 years). Though it is too early to accurately project the long-term financial impact of PFAS, if we use asbestos as a reference point, the risk鈥攁nd subsequent cost鈥攚ill be significant.聽

What are PFAS?聽

PFAS () are man-made chemical substances used in the manufacturing of products resistant to fire, water, and stains. PFAS is an umbrella category that encompasses thousands of different chemicals (including PFOA and PFOS) used in the United States since the 鈥40s to make many of the products we use daily: food packaging, cosmetics, steam-resistant rugs and furniture, cookware, firefighting foams, sports gear, and much more.聽

Why should consumers be concerned?聽

PFAS are often called 鈥渇orever chemicals,鈥 because they degrade very slowly in the environment. Due to their very broad application in everyday products and their resilient nature, PFAS exist in varying concentrations virtually everywhere around us鈥攐ur soil, groundwater, water sources, and food supply.聽

What鈥檚 most concerning is that once PFAS are introduced into a person’s bloodstream, they never break down but instead continue to accumulate over time. Some estimate that have some level of PFAS in their bodies, and this exposure is linked to many health concerns, including certain cancers, infertility, reduced birth weight, high cholesterol, thyroid disease, and Type 2 diabetes.聽聽

Individuals, cities, and states filed numerous PFAS-related lawsuits over the past several years against chemical companies and product manufacturers. Lawsuit claims range from pollution and environmental impact to sickness, disease, and other health issues.聽

What鈥檚 being done about PFAS?聽

Concerns about the safety of PFAS are , and environmental and public health advocates have for regulators to pay closer attention to the mounting crisis that PFAS pose. The recent Biden Administration is a long-awaited response to those calls for action. The plan proposes a joint-effort from the EPA, Defense Department, FDA, and Agricultural Department to tackle PFAS on multiple fronts鈥攆rom regulations on PFAS usage, rules against PFAS dumping, national testing strategies for food and water supply, and cleanup efforts for contamination sites.聽

Although these new regulations will curtail the introduction of more PFAS into the environment, the long-lasting nature of PFAS will have significant impact for decades to come.聽

What effect does this have on the insurance industry?

Insurance companies can expect to see the number of PFAS-related claims rise, as more government regulations and restrictions go into effect and more litigations hit the courts. Insurance companies will also continue to face the difficult decision of how to best assess and place these 鈥渇orever chemical鈥 risks, while PFAS become more challenging to underwrite.聽

Financially, the potential impact to the insurance industry isn鈥檛 clear, but if PFAS really are 鈥the next asbestos,鈥 as some predict, the cost would be significant. The estimated litigation costs alone to chemical companies is , which doesn鈥檛 include potential liability for companies who used PFAS in the manufacturing of their products or companies that sold or used products made with PFAS.聽

鈥淥nce these regulations are propagated, there will be a tsunami of litigation,鈥 says Canaan Crouch, Managing Director of 麻豆放映免费 Specialty Insurance Services. 鈥淚n terms of toxicity, the proposed regulation model is around 70 parts per trillion. To give you an idea, that鈥檚 like one drop of PFAS in an Olympic-sized swimming pool.鈥

How can PFAS impact the insured?聽

Given the widespread use of PFAS, companies with any sort of connection to these chemicals鈥攃hemical companies, manufacturers, retailers, etc.鈥攃ould be held liable for the negative impacts PFAS have on health and the environment. As regulators and courts start paying closer attention to PFAS and their long-term effects, these companies will be scrutinizing their existing insurance policies and guarding themselves as best as possible against any potential for litigation.聽

General Liability policies often have exclusions for pollution. Given the broad-reaching impact of PFAS, a growing number of carriers are for them as well. Environmental and pollution-specific policies vary from carrier to carrier and may include coverage for things such as remediation and clean-up. However, even some environmental carriers are also choosing to specifically exclude PFAS from policies to avoid costly risks, making it more difficult for companies to find appropriate coverage.聽聽

Carriers will need to consider policies on a case-by-case basis to help clients explore their options. In some instances, depending on risk, exclusions may be unavoidable, but there still may be the possibility for policies that cover pollutants, within certain parameters.聽

麻豆放映免费鈥檚 specialty brokers and underwriters have industry-leading knowledge about PFAS and know how to properly navigate the current marketplace landscape and keep our clients covered.聽 Our teams have environmental engineering backgrounds and have dedicated their insurance careers to the environmental marketplace. Contact us today to tap into the power of the 麻豆放映免费 platform.

The 麻豆放映免费 Environmental Insurance Team

The 麻豆放映免费 Environmental Insurance Team

麻豆放映免费鈥檚 team of environmental underwriters have dedicated their entire careers to the environmental sector 鈥 they are environmental professionals that happen to sell insurance. Our brokers have backgrounds as environmental consultants and geologists, which gives you and your clients a significant advantage. When it comes to environmental coverage, you don鈥檛 want a generalist broker. With the 麻豆放映免费 team, you can trust our brokers have worked every angle of the environmental industry and can customize our exclusive program capabilities for any environmental coverage need.
asbestos | chemical companies | climate change | environmental impact | environmental insurance | environmental liability | forever chemicals | man-made chemical substances | manufacturing | PFAS

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