What are PFAS?
Per- and polyfluoroalkyl substances (PFAS) are a group of over 4000 synthetic chemicals containing strongly bonded fluorine and carbon atoms1. They’re often called “forever chemicals” because they do not break down in the environment or the human body. These chemicals are the subject of worldwide litigation due to their alleged health effects. They represent an increasing risk exposure for insurers, and coverage issues for policyholders exposed to PFAS risk.
Widespread use of PFAS
PFAS are effective at resisting heat, stains, grease and water, and have been used in nearly every industry dating back to the 1950s.
Common PFAS applications include:
- Stain and water protection for carpets, fabric, furniture and apparel
- Paper coating (including for some food packaging)
- Metal plating
- Photographic materials
- Aviation hydraulic fluid
- Cosmetics and sunscreen
- Medical devices
Exposure Pathways
It is estimated that PFAS can be detected in the blood of 99% of Americans2. Most people in Australia are likely to have very low levels of PFAS in their bodies despite exposure to everyday household items like carpet and upholstery protective sprays, cosmetics, sunscreens, and some non-stick cookware. However, people living near sites where PFAS have been released into the environment in large amounts (for example, via fire-fighting foams or during manufacturing processes) may have higher levels in their bodies – particularly if they have been drinking contaminated bore water.
Research has shown that people can be exposed to PFAS by:
- Working in occupations such as firefighting or chemical manufacturing and processing.
- Drinking water contaminated with PFAS.
- Eating certain foods that may contain PFAS, including fish.
- Swallowing contaminated soil or dust.
- Breathing air containing PFAS.
- Using products made with PFAS or that are packaged in materials containing PFAS.
Alleged health risks
Exposure to PFAS has been linked to increased risk of the following health issues3:
- Reproductive effects: Decreased fertility, high blood pressure in pregnant women, and earlier menopause.
- Developmental effects: Low birth weight, accelerated puberty, bone variations, and behavioural changes.
- Cancer risk: Increased risk of prostate, kidney, and testicular cancers.
- Immune system effects: Reduced ability to fight infections, including reduced vaccine response.
- Hormonal effects: Interference with the body’s natural hormones, including thyroid and sex hormones.
- Cholesterol and uric acid levels: Increased levels of cholesterol and uric acid in the blood.
- Kidney function: Reduced kidney function.
- Metabolism and body weight: Altered metabolism and body weight regulation.
PFAS in the environment
In Australia, the historical use of PFAS in fire-fighting foams has resulted in increased levels being detected at sites like airports, defence bases, and other sites where fire-fighting training has been conducted, or where fire suppression systems are installed for extinguishing liquid-fuel fires. Increased environmental levels of PFAS have also been found near some industrial areas, effluent outfalls and landfill sites. Outside of these areas, it is unlikely that increased levels of PFAS would be present in the local environment.
The properties that make some PFAS useful in many industrial applications also make them problematic in the environment. The PFAS of greatest concern are those which are highly mobile in water, meaning they travel long distances from their source-point, they do not fully break down naturally in the environment and they are toxic to a range of animals.
The Australian Government has worked since 2002 to reduce the use of certain PFAS4, and many countries have discontinued, or are progressively phasing out their use. However the inability for PFAS to breakdown over time means that contaminated sites will continue to remain a health risk.
PFAS and the insurance industry
As awareness of PFAS grows, insurers face increasing pressure to address the risks these persistent chemicals pose. Their persistence in the environment and the human body makes them a significant challenge for insurers, especially when it comes to liability coverage, environmental exposures, and long-tail claims.
Industries with heightened exposure to PFAS risk
Industries including chemical, consumer goods manufacturing, firefighting and construction, are at heightened risk for PFAS exposure due to their use in production or reliance on PFAS-containing materials.
PFAS litigation trends
In Australia, several class actions have been brought in relation to the use of products containing PFAS used in firefighting on sites throughout Australia.
In May 2023, a PFAS contamination class action was settled with the Department of Defence. It was alleged that from the 1970s through to at least 2004 the ADF conducted firefighting drills using Aqueous Film Forming Foam containing PFAS. Further, it was alleged that the contaminants negatively impacted properties, land values and the livelihoods of surrounding communities in Bullsbrook, Townsville, Darwin, Richmond, Wagga Wagga, Wodonga and Edinburgh. On 25 August 2023, the Federal Court approved the $132.7m settlement and distribution scheme which determined how compensation will be distributed to about 30,000 claimants5.
Prior to this, in 2021, a landmark class action involved plaintiffs suing the Australian Government for allowing PFAS chemicals used in firefighting foams to escape RAAF Bases. Investigation revealed that PFAS chemicals were found to be ubiquitous in groundwater of the impacted properties. A $212.5m settlement was granted6 to claimants from the communities of Katherine in the Northern Territory, Oakley in Queensland and Williamstown in New South Wales for diminished property value, distress and the subsequent nuisance caused.
Further civil litigation may ensue if concrete links between levels of PFAS detected in blood and disease can be established. Concern about future health problems may have current mental health impacts on people with higher range levels of PFAS, or those living on sites with PFAS contaminated drinking water.
Key risk and insurance exposures
- Liability exposure
Companies involved with PFAS may face legal claims related to environmental contamination and health impacts (as detailed above). Insurers may face significant claims exposure from cleanup costs, medical expenses, and property damage. - Environmental insurance
PFAS contamination of water and soil demands costly remediation. Environmental impairment liability (EIL) policies may need to be reassessed as regulatory standards evolve, requiring updates in policy language, exclusions, and premiums. - Regulatory changes
To date governments including the USA and the European union have imposed tighter regulation and designated certain PFAS as hazardous. Australia’s response to date has primarily focused on regulation, environmental testing and stricter use of PFAS. Australian Government funding is also being used to research alternatives to PFAS with a view to eliminating these substances from use. Industries need to make sure they are keeping up to date with these regulations to avoid any potential fines or breaches by a statutory body. - Product recall and business interruption
Manufacturers using PFAS may face recalls and operational disruptions due to regulatory enforcement and contamination events. This may cause significant business interruption or product recall losses.
Insurer response to PFAS risk
As legal and regulatory implications continue to emerge, insurers are adapting their policies by adding conditions, exclusions and endorsements in response to PFAS related matters or potential claims.
How Bellrock can help
Our Advisors offer comprehensive risk assessment and risk management tools to businesses exposed to PFAS risks. We help implement procedures and strategies to reduce PFAS risk exposure and review your risk programme to identify gaps that may leave you vulnerable to uninsured PFAS-related litigation and claims. Please contact us if you would like to learn more.
1 What are PFAS?, Australian Government
2 Issue Brief | The State of PFAS Forever Chemicals in America (2024), Environmental and Energy Study Institute
3 Per- and Polyfluoroalkyl Substances (PFAS), Australian Department of Health and Aged Care
4 PFAS—your questions answered, The Department of Infrastructure, Transport, Regional Development, Communications and the Arts
5 PFAS Contamination Class Action, Shine Lawyers
6 New class action launched over toxic firefighting chemicals used by defence, The Guardian
