Recently, I attended the Perrin Environmental Risk and PFAS Litigation Conference in New York City, which expanded into a second day this year and was packed full of great panels. Though other environmental issues were covered, most of the presentations focused on the current state of PFAS regulation, chemical detection, and litigation (including insurance recovery litigation) in the United States.
I was honored to speak on a panel titled “Insurance Issues with Controlling Non-Point Source Pollution” along with Brian Clifford of Saxe, Doernberger & Vita and John Heft of RT Specialty. Non-point source pollution refers to urban runoff and other contamination that cannot be traced back to a single point of origin. We focused heavily on PFAS issues since their prevalence and ubiquity makes it difficult to identify where a PFAS contamination originated.
My co-panelists addressed the current landscape of coverage for PFAS and how they expect coverage battles to develop in coming years. John is already seeing PFAS exclusions in many types of policies for a broad swath of insureds, though the industry is still grappling with how to accurately define PFAS chemicals. Brian discussed how important the early pleadings will be in helping to establish ground rules and expectations for PFAS-related coverage litigation.
My portion of the presentation focused on what KCIC is seeing in these cases:
More Data, More Options
Applying PFAS bodily injury and property damage losses across predecessor insurance programs, locations, products, chemicals, and claimants — to name a few — requires knowing which costs apply to which years of which policies. The more data that is collected and categorized as the investigation and clean-up work is performed, the more options there will be to maximize the value of the insurance claims through multiple occurrences, uncapped defense for investigation costs, and other means.
Cost Codes Are Key
Such data demands will likely require environmental consultants and attorneys to utilize a dozen or more billing and task codes — an onerous task for both the consultant and whoever is tasked with reviewing invoices of their work. Policyholders should be prepared for their insurers to question investigation costs on a micro level given the potential dollars at stake. Insurers may deduct portions of individual time entries both for work they deem uncovered and for work they deem to have taken too long. Only with detailed cost data will policyholders have the tools to make their case as to why certain tasks and entries should be covered. This granular data will also assist with proving exhaustion of underlying insurance, assigning costs to integrated or batch occurrences, and conducting “what if” allocation analyses.
Collaboration: The Earlier, The Better
Sophisticated modeling tools allow for a broad range of computations for insurance claims, but they require voluminous details to generate such reporting. Companies facing PFAS and any other emerging mass tort would do well to collaborate with their insurance counsel and insurance consultants early in the evaluation process in order to preserve critical details for future insurance claims.
More from the KCIC team about PFAS liability:
Never miss a post. Get Risky Business tips and insights delivered right to your inbox.
Nick Sochurek has extensive experience in leading complex insurance policy reviews and analysis for a variety of corporate policyholders using relational database technology.Learn More About Nicholas