PFAS - Manufacturing

Quantifying reserving requirements for PFAS drinking water remediation liabilities

Environmental Liability

Costs to remediate PFAS contamination in drinking water sources could be as high as $175 billion across the entire United States. In 2023, water utilities in the US settled a nationwide class-action lawsuit with primary PFAS manufacturers DuPont (now Chemours) and 3M for $11.5 billion, leaving them with significant unfunded liabilities. Utilities could seek to close this financing gap through litigation with other sources within the PFAS supply chain, including manufacturing facilities, airports, military bases, wastewater treatment plants, and landfills. Understanding how individual facilities contributed to PFAS contamination will help insurers quantify their reserving needs for potential future litigation.

Chart described in caption — Comparison of distribution of payouts, required reserves, and opportunity cost of reserves for risk pooling versus risk shifting.

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