Environmental Insurance Market Update

Environmental Insurance Market Update

The question we’re getting most frequently from clients is: “Can you get pollution insurance for PFAS? I’ve heard it’s no longer available.”

The answer to that question is: “Yes, and you’ve heard wrong.”

A few things to remember:

1. What people refer to as “PFAS” isn’t a compound; it’s hundreds of compounds that fall into a general category of ‘per- and polyfluoroalkyl substances’ (acronymized as “PFAS”). Only a handful of them have been established to be hazardous to human health or the environment. The most commonly discussed (and regulated) compounds are perfluorooctane sulfonate (“PFOS”) and perfluorooctanoic acid (“PFOA”), although there are others.
2. The increased state and federal regulatory activity surrounding certain PFAS compounds does not necessarily mean it’s harder to get coverage. Broader regulations, consistently applied, can help give some degree of certainty to PFAS-related exposures, which can actually make such exposures more, not less, insurable.
3. Pollution legal liability (“PLL”) insurance companies are made up of seasoned scientists, engineers, and lawyers. They are on top of the legal and remediation-related exposures associated with PFAS. That’s a good thing. It means they understand the issues and, given a reasonable basis to do so, will take on certain PFAS-related risk. But they won’t do it unless they’re given a solid argument for doing so.

CAC has successfully obtained PFAS coverage on difficult exposures. A few examples include:

1. To support a large M&A transaction involving a chemical manufacturing and distribution company, CAC negotiated a portfolio (i.e., multi-location) PLL policy that provides coverage for remediation expenses (as well as bodily injury, property damage, business interruption, etc.) for the target’s historical operations, which involved the use of certain PFAS chemicals. This included remediation expense coverage for PFAS for sites that were the subject of regulatory-driven cleanup programs.
2. For a paint and coating manufacturer that was buying the coatings division operations of a competitor, CAC successfully obtained remediation expense coverage for PFAS for one of the target’s locations that had (possibly) leased the site to PFAS-using tenants.
3. For a paper manufacturer client that owned and operated mills that used PFOA in their products for use in food packaging and fast-food wrappers, CAC was able to get affirmative products pollution liability coverage, using production-related data that enabled us to structure a program that capped the client’s liability.

For additional information, please reach out to Grant E. Nichols, Environmental Practice Leader at grant.nichols@cacgroup.com or +1 215.990.9161

About CAC Group

CAC Group is a leading insurance broker and advisor that provides expertise and placement capabilities across the spectrum of insurance and capital markets. The entity comprises CAC Specialty, an industry leading specialty broker, CAC Agency, a P&C, personal lines and employee benefits broker, and CAC Capital, a structured solutions group that specializes in the convergence of insurance and capital markets. Collectively, CAC Group serves large corporations, small-to-medium enterprises as well as individuals. It is an employee-owned company and ranked in the top 40 of all U.S. brokerage firms. For more information, please visit us at www.cacgroup.com.

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