The Australian federal government has filed a $2 billion damages claim against US manufacturing giant 3M and its Australian subsidiary over PFAS contamination at 28 Defence Force bases — thought to be the largest legal claim ever brought by the Commonwealth and a lawsuit that carries profound implications for insurers, underwriters and the brokers who place environmental and product liability cover.
Attorney-General Michelle Rowland (pictured) announced the action, alleging 3M withheld results from its own environmental laboratory testing that showed significant adverse environmental effects associated with its PFAS-containing firefighting foam products.
“This misconduct has contributed to substantial costs for Defence and the Australian taxpayer, including over $1 billion to date to investigate, remediate and mitigate PFAS contamination at Defence estate sites,” Rowland said. “This is a government that is prepared to take on one of the biggest multinational corporations in the world.”
3M pushed back immediately, saying it would defend the claims through the legal process. “3M has never manufactured PFAS in Australia and ceased sales of the products at issue in Australia around two decades ago,” the company said in a statement, adding that the Department of Defence continued using PFAS-containing foams for nearly two decades after 3M’s exit from the market — a detail that is likely to feature prominently in any defence.
The aqueous film forming foams (AFFF) at the centre of the dispute were phased out of use in Australia from 2003 but had been in widespread use since the 1970s. Despite a US warning in May 2000 that the foam’s key chemical ingredients “potentially posed a risk to human health,” documents show Australia’s Department of Defence did not fully replace the 3M foam until July 2012.
PFAS — per- and polyfluoroalkyl substances — are a group of laboratory-made chemicals that persist in the environment, bioaccumulate in humans and animals, and are linked to serious health conditions including high cholesterol, lower birth weight and elevated risk of testicular and kidney cancer. Hotspots in Australia cluster around Royal Australian Air Force bases where the foam was most heavily used, and contamination has leached into surrounding groundwater and communities.
For the insurance market, the government’s $2 billion claim demonstrates the kind of liability exposure that has been building quietly across the Australian economy for years.
Environmental insurance specialists have been flagging PFAS as the most significant emerging liability class since well before this lawsuit was filed. Christopher Pell of Intact Insurance, speaking to Insurance Business last month, described the potential global settlement costs as exceeding $100 billion — double the size of asbestos mesothelioma trust funds — calling PFAS “the next generational environmental liability after asbestos.” His central warning to brokers: less than 10% of companies with genuine environmental exposure carry adequate coverage, with many incorrectly assuming their general liability policies will respond to environmental claims. They won’t.
The allegation that 3M concealed its own test results adds a critical dimension for insurers and reinsurers. If proven, it could support arguments around fraud, fraudulent concealment and the tolling of limitation periods — meaning insurers facing claims from entities along the supply chain may find it harder to argue that known-risk exclusions apply, or that coverage windows have closed.
For product liability and environmental impairment liability (EIL) policies written over the decades when AFFF was in active use, the question of what was known, when it was known, and by whom will be central to coverage disputes. It is precisely the kind of causation and supply chain liability question that environmental insurance specialists say is still evolving in Australian case law._
The government’s lawsuit is a hard news peg — but the coverage gap it exposes has existed for years, and brokers with clients in manufacturing, aviation, industrial operations, waste management, landfill, and defence-adjacent sectors need to act on it.
The PFAS litigation frontier has, until now, been primarily focused on manufacturers. But environmental law specialists warn it will move. Production, integration and disposal sites — including landfills and wastewater treatment facilities — represent significant PFAS aggregation risk that is still poorly understood and frequently uninsured.
Insurance Business TV’s Q2 Environmental Roundtable, recorded yesterday, noted that while the soft market has not prompted major underwriting changes to PFAS approaches — some carriers cover it, some exclude it, others apply sub-limits — brokers need to look carefully at the interaction between premises pollution policies, GL, property and other covers. A PFAS exclusion on a premises policy does not necessarily mean PFAS exposure is uninsured across an entire programme — but assuming it is covered elsewhere without verification is a dangerous shortcut.
The immediate practical step for brokers is to review client exposures now, audit whether existing policies actually respond to PFAS-related environmental claims and open the conversation before a claim — not after. As Pell put it: the goal is preventing clients from “taking catastrophic environmental losses only to discover they’re uninsured.”
After three decades of contamination and more than $1 billion already spent on remediation, Australia’s forever chemicals problem has arrived in the Federal Court. For the insurance industry, the question is no longer whether PFAS liability will crystallise — it could be whether the right cover is in place when it does.
