Forever Chemicals Are Poisoning Your Insurance

The Lever
Tuesday, June 11, 2024


Elizabeth Mitchell received a notice from her commercial property insurance company in April that set off alarm bells. 

Acadia Insurance, the insurer for the market, workspace, and wellness-center nonprofit she runs in West Cornwall, Connecticut, would no longer cover “bodily injury, property damage or personal and advertising injury” from “contact with, exposure to, existence of, or presence of any ‘PFAS.’”…

Yet insurers’ fears about not being able to afford PFAS lawsuits may be misplaced, said Joanne Doroshow, executive director of New York Law School’s Center for Justice & Democracy. The industry had stored away more than one trillion dollars in surplus profits by the end of 2021 — an all-time high. 

“We have insurance in order to protect us and we pay a lot of premiums to these companies with the expectation that when there is a claim they’ll pay it — and they don’t want to pay it,” Doroshow said. …

With this in mind, avoiding PFAS lawsuit payouts is par for the course for insurers, said Doroshow. “It’s about dumping risk,” she said. “That seems to be the business model of insurance companies.” 

Yet Doroshow questions if PFAS pose a dire risk to insurers’ profits.

In the decade leading up to 2020, industry data showed that total commercial insurance payouts “had not spiked and generally tracked the rate of inflation and growth of population,” according to research by Doroshow and her colleagues. Meanwhile, insurers like Travelers — a major player in property and casualty insurance — hit their largest-ever profits this January, while premiums for policyholders soared

Regardless, noted Doroshow and her collaborators, industry leaders “publicly spin the notion that the industry is financially beleaguered and cannot pay claims without significantly raising rates.” 

While collusion to raise prices is illegal in many businesses, certain activities by insurers are exempt from federal antitrust laws, allowing them to share information about past losses and make future coverage and premium decisions accordingly. 

“It’s really a function of a completely unregulated industry,” said Doroshow. “They don’t have any federal regulation.” 

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