Navigating PFAS: What the insurance industry needs to know now

The re/insurance industry faces a growing wave of challenges, including cyber threats, geopolitical tensions, inflationary pressures, and a significant emerging risk of per- and polyfluoroalkyl substances (PFAS), a widely used class of chemicals that are subject to growing litigation and regulatory oversight. Preparing for this volatile and uncertain future with risks accelerating has never been more urgent. 

Over 220 attendees will gather in Zurich to attend the 3rd Annual Re/Insurance Outlook Europe – the premier forum for insurers, reinsurers and brokers across Switzerland and Europe being held, 24-25 June, 2025 in London.

Drew Groth, Consulting Actuary, Milliman together with Andrea Scascighini, Head of Casualty Portfolio Analytics and Steering, Swiss Re will lead a session on day one of the forum to discuss the shifting legal, regulatory and financial landscape surrounding PFAS in both the US and Europe and what that means for re/insurers. Discussions will include the mid and long-term outlook for PFAS, including the expanding classes of insureds, new causes of action, evolving scientific evidence and the continued uncertainty around coverage interpretation. 

Groth has over a decade of specialised expertise in evaluating complex risks within property and casualty insurance.  He leads Milliman’s initiative to build actuarial approaches for PFAS and oversees the development of models for PFAS, talc, SAM, glyphosate, and autonomous vehicles, among other novel risks. He is a Fellow of the Casualty Actuarial Society and a Member of the American Academy of Actuaries.

Why do PFAS represent a systemic risk to the insurance industry, and how does this risk compare to past latent exposures?

PFAS represent a systemic risk due to their widespread use across numerous industries, persistence in the environment, and the growing body of scientific research linking exposure to adverse health outcomes. Like asbestos, PFAS exposures are latent, long-tailed, and often tied to products or industrial processes that date back decades, with some PFAS compounds first produced commercially in the 1940s. They have also triggered environmental remediation orders, drawing parallels to legacy pollution exposures and Superfund site cleanups.

However, PFAS introduces a new set of challenges. These chemicals are found in everyday consumer products, significantly broadening the potential exposure base beyond the industrial settings typical of asbestos. Their extreme persistence allows them to migrate through air, soil, and water, making contamination harder to contain and increasing the number and variety of sites potentially subject to remediation.

The financial implications could play out over decades, involving a wide array of defendants and a mix of claim types: environmental remediation, property damage, bodily injury, and even allegations of deceptive marketing. To date, several settlements have exceeded $100 million USD, with thousands of PFAS-related cases pending in the U.S. and abroad. The breadth of exposure and the scale of potential liabilities make PFAS a uniquely complex and difficult risk to quantify for the insurance industry.

What does the PFAS litigation landscape look like today, particularly in the U.S., and what litigation trends should be monitored going forward?

The PFAS litigation landscape is rapidly expanding, particularly in the United States where more than 10,000 lawsuits are pending and over $17 billion USD in settlements have been announced. While early cases primarily targeted chemical manufacturers and focused on drinking water contamination, plaintiffs are increasingly naming a broader set of defendants across sectors such as apparel, food packaging, and cosmetics. Allegations span property damage, environmental remediation, bodily injury, and deceptive marketing practices, and plaintiffs include individuals living near contaminated sites, water utilities, government entities, and even investors.

The AFFF multidistrict litigation (MDL), centered on firefighting foams, remains the most significant U.S. litigation to date. It has already produced over $13 billion USD in settlements for water remediation and includes thousands of unresolved bodily injury claims. Bellwether trials in 2025 may shape the trajectory of future litigation and establish key legal precedents.

Meanwhile, more than half of U.S. state governments are actively pursuing PFAS-related litigation, with several already reaching large settlements. As new legal theories, such as greenwashing and failure-to-warn, gain traction, the pool of defendants continues to widen. Large-scale settlements and new waves of litigation may be on the horizon, making it essential for the insurance industry to monitor this evolving landscape closely.

How might emerging causes of action and an expanding pool of defendants shape the liability footprint for PFAS?

PFAS liability is no longer limited to chemical manufacturers. Emerging causes of action, including deceptive marketing, investor disclosures, and occupational exposure are significantly broadening the pool of defendants. Companies that incorporated PFAS into their products, promoted them as “safe,” “sustainable,” or “non-toxic,” or those that failed to disclose PFAS-related risks to shareholders are being targeted in litigation.

This expansion of the defendant pool and causes of action raises the likelihood of claims affecting multiple lines of business, such as general liability, D&O, environmental, and property. It also means that insureds not traditionally associated with pollution or mass tort risks, such as apparel brands and food producers, could now face latent PFAS exposures. For re/insurers, this broadening footprint increases the risk of unforeseen aggregation across legacy portfolios, making it essential to rethink how to effectively assess and manage exposure.

Given the limited settlement history and ongoing uncertainty, how can the insurance industry begin to meaningfully quantify PFAS liabilities today?

Quantifying PFAS liabilities is challenging, but far from impossible. Traditional actuarial methods struggle in this context due to limited historical claims data, long manifestation periods, and evolving litigation. However, exposure-based and stochastic modelling approaches offer a practical and forward-looking path.

These methods begin by identifying potential exposure across insured portfolios, considering factors like industry, geography, and policy structure, then layering in legal and regulatory variables to simulate a range of plausible outcomes. This enables insurers to develop reserve estimates at both the account and portfolio level, quantify potential bulk IBNR, and evaluate risk concentrations that may not yet be reflected in claims data.

Beyond reserving, this framework supports pricing, underwriting, claims management, and enterprise risk management. It can help segment risk tiers, support informed settlement strategies, and stress-test capital adequacy under different litigation and regulatory scenarios. Most importantly, it allows insurers to shift from a reactive posture to a proactive one, using available data to build and refine strategies before liabilities materialize.

The key is not to wait for perfect data, but to leverage current insights, model risk using credible leading indicators, and continuously adapt as the PFAS landscape evolves.

What proactive steps can re/insurers take now to manage PFAS exposure and long-tail volatility, and help prevent future strain on the balance sheet?

Re/insurers can take several proactive steps today to manage PFAS exposure and long-tail volatility. Begin by assessing potential exposure across both legacy and active books. Segment insureds based on known PFAS risk factors and integrate scenario-based modelling into reserving and capital planning to better understand potential outcomes.

Close coordination with legal and claims teams is essential to evaluate coverage positions and track how other market participants are responding to emerging PFAS risks. At the same time, review current policy language and consider introducing PFAS-specific exclusions where appropriate on new business.

Quantifying potential exposure using actuarially sound, forward-looking methods provides a foundation for these efforts. These calculated insights can inform underwriting decisions, support reinsurance placement and risk transfer strategies, and guide enterprise risk management for an integrated approach to PFAS.

By acting now, re/insurers can avoid reactive reserve strengthening, limit exposure to adverse development, and position their organizations to respond confidently as PFAS-related claims continue to evolve.

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