A flood, a storm or a bushfire is usually filed as a property loss. The growing risk for brokers is that the same event can trigger an environmental liability claim the client never insured against and one that standard property and general liability wordings are increasingly built to exclude.
Australia offers a clear warning. From July 1 2025 it banned the manufacture, import, export and use of three per- and polyfluoroalkyl substances (PFAS) – PFOS, PFOA and PFHxS – listing them as Schedule 7, the highest concern level under the Industrial Chemicals Environmental Management Standard (IChEMS) administered by the Australian Industrial Chemicals Introduction Scheme (AICIS). Months later the Commonwealth launched a claim of roughly $2 billion against manufacturer 3M over PFAS contamination at 28 Defence sites, described by the federal government as its largest legal claim. Pollution, asbestos and PFAS exclusions are now near-standard in commercial wordings on both sides of the Tasman.
New Zealand sits a step or two behind on the same path. The Environmental Protection Authority (EPA) is phasing out PFAS-containing firefighting foams, with contained use to be eliminated from December 2025 and has banned PFAS in cosmetics from 31 December 2026. The local legacy is already visible: the New Zealand Defence Force detected PFAS from firefighting foam in soil and groundwater around the RNZAF bases at Ohakea and Woodbourne in 2017, contamination that has persisted for years. Australia's litigation shows such exposures eventually find an owner.
For Anthony Saunders (pictured), partnership director for EnviroSure at Gow-Gates Insurance Australasia in Sydney, this underlines the need for brokers and their clients to stop assuming pollution risk is not an issue worth looking at seriously, or that it might already be covered.
"When it comes to pollution, asbestos, PFAS – any liability associated with pollution, whether to the air, ground or sea – start with the assumption that it is not covered until the insurance broker understands exactly what the risk is and can engage an environmental insurance specialist to put the cover together," Saunders said.
Saunders laid out a practical, broker-friendly checklist for surfacing the environmental exposures hiding in ordinary commercial property accounts.
The checklist begins with a conversation. First, ask whether the client actually understands the potential risk before anything is arranged. Second, establish whether they have engaged an accredited site auditor or a qualified contaminated-land specialist to assess the site. Third, bring in an environmental expert to map the risks that prevail and to head off future exposure. Fourth, have an assessor confirm that fire protection – both passive and active – meets industry standard, since fire is one of the fastest routes from a property event to a pollution event. Fifth, always use an independent third party to validate any mitigation the client has put in place. Sixth, calculate the worst-case cost of the environmental externalities a client could face.
That final step matters even when the odds look comfortable, because exposure is not the same thing as probability.
"There is not one occupation, profession or manufacturing process that doesn't have environmental externalities they haven't thought about – that 1 in 10,000 chance of occurring that their existing insurance policies don't cover," Saunders said.
From there, pricing follows logic rather than guesswork. Saunders suggested asking the client what level of liability they could absorb uninsured, using that figure as the excess and seeking a quotation for cover above it – letting an insurer price the residual environmental liability with confidence.
The sharpest part of his argument is aimed squarely at brokers' own balance sheets. Pointing to a long-running line of pollution coverage disputes, Saunders argued that brokers can no longer claim specialist environmental cover was simply unavailable.
"It's taken time, but it's time we all understood the liabilities associated with this sector and recognised that any liability you haven't covered for your client as a broker is a direct exposure against your own professional indemnity insurance policy," Saunders said.
Environmental impairment liability cover – designed to respond to gradual or sudden pollution that standard policies exclude – remains underused even as the regulatory ground shifts. Brokers weighing where to start can review how PFAS is reshaping environmental exposure for clients, follow the Commonwealth's landmark damages action against 3M and watch the roundtable on the environmental gaps in property and M&A deals.
For Saunders, the checklist is less a compliance exercise than a survival tool – for the client and for the broker advising them.
