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Navigating the Complex World of PFAS Liability

Sep 5, 2024

If you’re an insurance agent serving clients in sectors like municipal water districts, environmental services, or industries involved in the production or use of chemicals, you’ll want to pay close attention to the latest developments on perfluoroalkyl and poly-fluoroalkyl substances (PFAS). Often referred to as “forever chemicals,” PFAS are synthetic compounds prized for their heat, water, and oil resistance. However, their persistence in the environment has led to widespread contamination and health concerns, including links to cancer and liver damage.

The Insurance Implications

According to a recent article in Insurance Journal, the economic liability associated with remediating PFAS in U.S. water districts is estimated at $175 billion. Since the first major PFAS-related lawsuit was filed in 1999, more than 6,400 suits have emerged, targeting chemical producers and manufacturers that added PFAS to their products. Because these lawsuits often involve multiple types of insurance coverage, including general liability, pollution legal liability, and directors and officers (D&O) coverage, knowledge across sectors is key.

Canaan Crouch, Executive Vice President of the Environmental and Energy Division at Jencap, explains, “PFAS claims and the policy archaeology accompanying those claims will seek to extract indemnity payments from old General Liability (GL) policies.” This situation will test the Total Pollution Exclusion on the ISO GL form, traditionally used to exempt insurers from covering pollution-related damages​.

As the industry grapples with these challenges, there is a silver lining for policyholders with older multi-year pollution policies. “Since this is a relatively new feature in the insurance landscape, there may be coverage on older multi-year pollution policies,” Crouch explains. “Working with an environmental insurance specialist can help an insured evaluate their options.”

Proprietary Modeling and Future Challenges

Understanding and estimating the financial impact of PFAS water contamination is daunting. Even the modeling approach is complex, taking in geospatial, regulatory, and industry data to assess potential costs and risks associated with PFAS compounds​. As the modeling becomes sharper, we can better estimate the potential financial liabilities and provide insurers and corporations with the tools necessary for enterprise risk management, underwriting, pricing, and reserving.

The Unseen Depths of PFAS Liability

When you think “PFAS liability,” do a slew of contacts burst into your mind? Probably not. That’s why a partner like Jencap can be a real asset in securing coverage for your clients. With access to a wide variety of carriers who specialize in this niche space, we help you become the expert in the room without returning to chemistry class.

“We are just scratching the surface on total unknown PFAS liabilities,” Crouch notes. “Time will tell how deeply they have contaminated our water supply and wastewater systems.” But as we watch things unfold, you can do so from a prepared and informed mindset. Because with Jencap in your corner, even these uncharted waters can be explored and overcome. Contact us today to learn more.
The Jencap Environmental Insurance Team

The Jencap Environmental Insurance Team

Jencap’s team of environmental underwriters have dedicated their entire careers to the environmental sector — 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’t want a generalist broker. With the Jencap 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.

PFAS | PFAS in water

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Put Jencap to Work For You

Whether they realize it or not, most every business has some sort of environmental exposure. It’s more important than ever for companies to evaluate their environmental risk profile and secure appropriate insurance coverage. At Jencap, we don’t have generalist brokers; our dedicated team of environmental brokers has worked every angle of the environmental industry and knows it inside and out. By partnering with Jencap, you’ll have an industry-leading wholesaler on your side, working with you and your clients to secure the coverage — and peace of mind — your clients need.
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