Are PFAS the new asbestos? Reinsurers worry on emerging risk
Risks from per- and polyfluoroalkyl substances (PFAS), the so-called “forever chemicals”, have the potential to permeate any number of product and industrial liability lines with early claims already in the works in the US and “now coming over slowly to Europe.”
That is what Patrick Roder, Swiss Re’s head of Casualty Underwriting for EMEA, told a webinar on key risks ahead of the Baden-Baden reinsurance conference. But it is an issue growing in importance for all reinsurers.
PFAS are widely used, long-lasting chemicals, which break down only very slowly over time. Their widespread use and longevity means they have found their way into everything: not just the products at hand, but the broader environment, the food supply and the human body.
Absolute stances from insurers, be it for exclusions, ring-fencing or just good old-fashioned rate adjustment, may prove difficult.
“It’s a very individual approach,” Clarisse Kopff, Munich Re’s board member for the Europe and Latin America division, told a briefing ahead of Baden-Baden. Only producers of PFAS chemicals are immediately assured of a “tougher stance”.
“We need to clarify exposure closer to end users,” Kopff said. “Then look into what it means in terms of pollution.”
Early talks with cedants are a must, but they continue to be exploratory, Swiss Re concurs. “PFAS is a topic in any discussion with our clients,” Thorsten Steinmann, Swiss Re’s head for Northern, Central & Eastern Europe, noted. But it remains “much too early” to consider any blanket approach.
“We’re not simply going out to ask for exclusions,” Steinmann said. “We assess the exposure, try to understand it, see what our clients are doing. It is a relatively new topic for the industry.”
US courtrooms are leading the way on PFAS. “ I see a lot of adverse settlements across American jurisdictions and it is starting to emerge as a potential risk in Europe,” said Kopff.
Comparisons to asbestos have been inevitable—Swiss Re might argue that they have also been overdone.
“There are a couple of differences,” Roder said to ward off fears. “As opposed to asbestos, as of now, PFAS don’t have a signature disease,” he said. “With thousands of PFAS chemicals in use across the widest range of industries, making a link to specific PFAS exposure is more difficult.”
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