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Perfluoroalkyl or polyfluoroalkyl substances (PFAS), the synthetic “forever chemicals” found in everything from firefighting foam to food packaging, are shaping up to be one of the most urgent emerging risks facing the insurance industry. Like asbestos, PFAS exposures are widespread, long-tailed, and increasingly litigated. And all the while, many insureds don’t even realize they’re at risk.

We’ve been closely monitoring this trend. In Alera’s 2025 Property & Casualty Market Outlook, environmental liability was flagged as a key watch area, particularly as regulatory scrutiny increases and PFAS-related litigation spreads beyond traditional sectors.

Why the PFAS Risk Is Accelerating

Litigation around PFAS is gaining traction, especially for companies that historically used or produced firefighting foam or industrial coatings.

In June 2023, several chemical manufacturers reached multibillion-dollar settlements with U.S. water utilities over contamination claims, including 3M’s $10.3 billion settlement to resolve allegations of PFAS pollution in public water systems. And this is just one instance. Praedicat predicts that PFAS could become an $80 billion issue for both insurers and insureds, with a 1% chance that the total expense could exceed $200 billion.

‘PFAS liability is prompting underwriters to re-examine how they approach pollution exclusions and Environmental Impairment Liability policies.’

The U.S. Environmental Protection Agency is also cracking down. In 2024, the EPA finalized the first national drinking water standards for six PFAS chemicals, a move expected to increase monitoring requirements and potential cleanup costs for both public and private entities.

Who’s Most at Risk?

While much of the early attention focused on chemical producers and water systems, the web of PFAS exposure now touches a broad range of industries–and often in ways companies haven’t yet accounted for.

Industries with elevated PFAS exposure risk include:

•

Firefighting services (due to legacy use

of aqueous film-forming foam)

•

Airports, military facilities, and fuel

storage sites

•

Manufacturers of textiles, nonstick

cookware, and consumer packaging

•

Real estate and construction firms with

brownfield or legacy site exposure

•

Waste management and wastewater

treatment facilities

Even companies that didn’t directly manufacture or handle PFAS may inherit liability through M&A activity or past property use. This is especially true for long-standing industrial sites that have changed ownership over the years.

What Businesses Can Do Now

This is not a “wait and see” risk. Proactive steps can make a big difference in both insurability and risk management.

1.

Conduct risk audits. Work with environmental consultants to assess PFAS exposure in supply chains, operations, and legacy properties.

2.

Review policy language. Many general liability and umbrella policies contain pollution exclusions that may or may not address PFAS-related claims. Engage brokers early to understand coverage gaps.

3.

Revisit environmental site assessments. If your business has acquired facilities through mergers or growth, revisit historical data and Phase I/II reports to understand potential liabilities.

4.

Prepare for tighter underwriting. As insurers get more selective in environmental lines, businesses that can clearly document their exposure (or lack thereof) will have an edge.

What Brokers Should be Watching

PFAS liability is prompting underwriters to re-examine how they approach pollution exclusions and Environmental Impairment Liability policies. Some insurers are already introducing PFAS-specific exclusions or revising questionnaires to identify high-risk industries. For brokers, this is the time to:

•

Educate clients on how PFAS may

impact coverage.

•

Encourage early conversations with

insurers to avoid surprises at renewal.

•

Help clients compile thorough risk

disclosures and risk mitigation plans.

The better prepared clients are, the better their odds of securing comprehensive and affordable coverage.

Don’t Wait to Get Ahead

PFAS liability is growing fast–not just in size but in scope.

While the full financial impact is still unfolding, the regulatory signals and legal activity are clear: This is the next major environmental risk businesses and insurers need to get ahead of.

For insureds, that means taking proactive steps to identify and address exposure before it becomes a costly

claim. For brokers, it means leading those conversations early and building smart strategies that account for a changing liability landscape.

The businesses that get ahead of PFAS risk today will be the ones best positioned to protect themselves tomorrow–and brokers have a key role to play in helping them get there.

Foa is executive vice president, national practice leader for property & casualty at Alera Group.

Topics Carriers