Per- and polyfluoroalkyl substances, or PFAS, known as "forever chemicals," continue to spark concern in the environmental insurance world. Though insurers are getting more comfortable with the risks, PFAS still creates challenges in coverage and claims.
Jared Dubrowsky, executive vice president of environmental at Howden US, explained that while PFAS used to be a little-known issue, it has become a major topic in U.S. environmental risk. He said the problem isn’t going away anytime soon, but insurers are starting to accept the exposure more than before.
Just a year ago, many carriers were refusing to cover PFAS in insurance policies. Now, only a few are outright excluding it. On the environmental insurance side, companies are willing to cover bodily injury and property damage related to PFAS. This is mostly for defense costs, not cleanup.
However, general liability (GL) insurance tells a different story. Most GL policies now have specific PFAS exclusions. This is not a new concept, since pollution exclusions have been part of GL policies since the 1980s. The clear mention of PFAS in exclusions just brings the issue back into focus. Dubrowsky said clients are noticing these exclusions and asking questions about them.
The rise in awareness is pushing brokers to play a bigger role. They’re helping clients track past operations and prepare for changing rules. They also look into old insurance policies from before the pollution exclusions became standard. Those older policies might still offer some coverage for PFAS-related contamination.
One big hurdle for insurers remains cleanup costs. The U.S. federal government hasn’t set official soil cleanup standards for PFAS. Instead, there are varying rules across states and some EPA guidance. This uncertainty makes insurers cautious about offering cleanup coverage.
Dubrowsky pointed out that the most common claims are for defense against bodily injury and property damage. Since PFAS is found almost everywhere in consumer products and the environment, it’s hard to link harm back to just one source. That makes these claims mostly about legal defense rather than payouts.
For brokers, this means they have to get really familiar with their clients’ history and industries. Many businesses today look very different from how they operated decades ago, when PFAS might have been used. Understanding this helps brokers build better environmental insurance plans.
Looking ahead, brokers should also help clients anticipate where PFAS regulation is heading, especially those in sectors with heavy chemical use or big manufacturing operations.
Overall, while PFAS remains a tough issue, insurance markets are slowly adjusting. The key is thorough research into a company’s past and close attention to changing laws. This approach can help protect businesses from PFAS risks even as the situation develops.