The insurance industry has spent much of the past decade grappling with potentially asbestos-scale liabilities tied to per- and polyfluoroalkyl substances (PFAS). Yet even as litigation around these “forever chemicals” accelerates, underwriters warn that a broader (and less understood) set of environmental risks is quietly cropping up among businesses.
At the same time, a more immediate concern persists: most companies remain dangerously underinsured. Fewer than 20% of businesses purchase specialized environmental policies to protect against environmental exposures, according to Aon.
Christopher Pell (pictured), senior underwriting manager for environmental risks at Intact Insurance Specialty Solutions, put the figure at less than 10% of companies with environmental exposure that carry adequate coverage.
“It’s hard to define precisely, but the gap is significant,” Pell told Insurance Business. “The misconception is that environmental liability is niche. If a business touches air, water or land, it has exposure.”
PFAS remains the most prominent emerging risk. Used for decades in industrial processes and consumer goods, the chemicals are now linked to widespread contamination and mounting legal claims. PFAS-related settlements could potentially exceed $100 billion, according to legal analyses from firms such as Morgan Lewis and research cited by the US Environmental Protection Agency.
But insurers increasingly view PFAS as only the first wave.
E-waste is fast becoming another major environmental risk driver. The United Nations Global E-waste Monitor estimates that global electronic waste reached 62 million tonnes in 2022, growing five times faster than documented recycling. The US alone generated more than 7 million tonnes, according to the US Environmental Protection Agency.
Despite its scale, the long-term environmental and health impacts of improper disposal, particularly involving heavy metals and toxic components, remain only partially understood. “That’s where underwriting becomes difficult,” Pell said. “You have rapid growth in a waste stream, but limited medical or legal precedent and it creates a data gap.”
Lithium-ion battery waste presents a similar challenge. Driven by electric vehicle adoption and energy storage demand, lithium battery production is surging. The International Energy Agency estimates global battery demand could increase sevenfold by 2030. However, infrastructure for safe recycling and disposal remains uneven.
Beyond industrial waste, insurers are tracking less visible contaminants that could evolve into systemic liabilities.
Microplastics (tiny fragments now detected in water, soil and even human tissue) have drawn increasing scrutiny. A 2024 study published in Environmental Science & Technology, supported by the National Institutes of Health, found microplastics present in over 90% of tested water samples in the US.
While the causal link between exposure to specific health outcomes remains uncertain, the ubiquity of the particles could complicate future litigation. “Microplastics could follow a similar path to PFAS,” Pell noted. “But because they’re everywhere, proving causation may be even more complex.”
Pharmaceuticals and personal care products are another emerging concern. Hormones, antibiotics and other compounds frequently enter wastewater systems through improper disposal. The US Geological Survey has detected pharmaceutical residues in a majority of US streams tested, raising questions about ecological damage and human exposure through water and food systems.
“These substances can act as endocrine disruptors,” Pell said. “These can act as endocrine disruptors and often aren’t disposed of properly. When they enter water or food systems, they create risks of mass exposure.”
Despite the expanding risk landscape, insurance uptake remains limited.
Many businesses assume their general liability (GL) or property policies will respond to pollution events. In reality, most GL policies include pollution exclusions or offer only minimal sublimits, often as low as $10,000 to $25,000. By contrast, cleanup costs and third-party claims can easily exceed $1 million, particularly in cases involving groundwater contamination or hazardous spills.
Looking ahead, insurers expect liability frameworks to evolve, particularly for PFAS. Early litigation has focused on manufacturers, but attention is shifting toward downstream users and disposal sites. Pell said landfills and wastewater treatment facilities, in particular, may face increased scrutiny as repositories for persistent contaminants.
“We talk about ‘cradle to grave’ liability,” Pell said. “Manufacturing is the cradle, but the next phase will look at how these chemicals were used, and ultimately where they ended up.”
Broker expertise also plays a role. “Blind spots exist both in coverage and in understanding how different policies interact,” Pell said, emphasizing the importance of partnership between specialist intermediaries and carriers.
“The goal is to avoid a situation where a company only discovers the gap after a catastrophic loss. Education is still the first step. This isn’t a one-size-fits-all product.”
