Slide 1: PFAS: The Tip of the Tort Iceberg?
PFAS: The Tip of the Tort Iceberg? An Emerging Issues Presentation Featuring Assured Research and Verisk’s Arium Liability Analytics July 18, 2024 © Verisk Analytics, Inc. All rights reserved. 1
Slide 2: Policy Statement
Policy Statement The policy of Verisk Analytics and subsidiary companies is to comply in all respects with federal and state antitrust laws. With this in mind, we want to mention that during all seminars held under our auspices, this policy prohibits discussion of certain topics. Because we want to
Slide 3: Agenda & Speakers
Agenda & Speakers Greg Scoblete, Emerging Issues Analyst, Verisk • EPA Activity: What’s New for 2024? • Recent Health Research: No Good News • The Remediation Challenge Lucian McMahon, Senior Manager, • Estimating the Ground-up Loss Arium Liability Analytics, Verisk Potential • Insurance Implication
Slide 4: PFAS: EPA Activity, New Health Research, and the Remediation Challenge
PFAS: EPA Activity, New Health Research, and the Remediation Challenge Greg Scoblete, Emerging Issues Analyst, Verisk © Verisk Analytics, Inc. All rights reserved. 4
Slide 5: EPA Primary National Drinking Water Regulation: Final Rule
EPA Primary National Drinking Water Regulation: Final Rule Compound Final Maximum Contaminant ➢ By 2027: Initial water system monitoring complete Level (MCL) ➢ By 2029: Reduce PFAS levels PFOA 4 parts per trillion (ppt) if they exceed MCLs ➢ By 2029: Water systems must PFOS 4 ppt provide notice to p
Slide 6: Other 2024 EPA Actions
Other 2024 EPA Actions Final “…EPA will focus on holding accountable those parties that have played a ➢ CERCLA designations for PFOA, PFOS significant role in releasing or ➢ Added seven PFAS to Toxic Release exacerbating the spread of PFAS into the Inventory reporting environment, such as those who
Slide 7: PFAS: No News Is Good News
PFAS: No News Is Good News A review of recent health research • PFAS exposure in males linked to • Contact lenses linked to higher health issues in offspring PFAS levels in wearers, including • Consumption of tea, processed at levels considered potentially meats, and food prepared outside unsafe the
Slide 8: PFAS Removal: The Cleanup Begins…
PFAS Removal: The Cleanup Begins… Absorb, separate, destroy Remediation challenges: ➢ PFAS seeps deep into ground, making excavation of contaminated soils difficult ➢ Existing underground injection wells for long-term PFAS waste storage are in limited supply ➢ Landfilling may result in additional PF
Slide 9: Estimating the Ground-Up Losses from PFAS Litigation
Estimating the Ground-Up Losses from PFAS Litigation Lucian McMahon, Senior Manager, Arium Liability Analytics, Verisk © Verisk Analytics, Inc. All rights reserved. 9
Slide 10: Scoping Arium's PFAS Model
Scoping Arium’s PFAS Model Estimate potential insurable ground-up losses in the U.S. arising out of PFAS- contaminated drinking water and related environmental litigation Potentially Potential for Hundreds of Up to thousands of significant companies $165 billion contaminated litigation across in pot
Slide 11: Estimating Liability Event Parameters
Estimating Liability Event Parameters Applying a Liability Modeling Framework to a Complex Problem Exposure and Industry Exposed Potential Economic Litigation Footprint Companies Damages Losses Pathway Narrative for Industries with Characteristics Estimated Plaintiffs and how litigation potential of
Slide 12: Industry Footprint and Exposed Companies
Industry Footprint and Exposed Companies Arium analysis indicates dozens of industries and hundred of companies have potential exposure Primary Industries known to Manufacturing manufacture PFAS Industries known to use or Secondary incorporate PFAS into Manufacturing products or components Wholesale
Slide 13: Estimating Potential Losses: Approach and Results
Estimating Potential Losses: Approach and Results Sources of Impacted Potential Losses Contamination Populations • Simulating • People potentially • Clean-up and contaminated exposed through remediation drinking water their drinking • Bodily injury and sources water property damage • Medical monitor
Slide 14: Insurance Industry Implications & Possible Response
Insurance Industry Implications & Possible Response Bill Wilt, President, Assured Research © Verisk Analytics, Inc. All rights reserved. 14
Slide 15: Assured Report: Elections Have Consequences
Assured Report Elections Have Consequences July 2024 Near term path of PFAS liabilities likely to be influenced by 2024 election Research and Analysis for Insurance Professionals
Slide 16: Our Main Points
Our Main Points To be clear, we believe the financial pressures from mass torts generally, and PFAS specifically, will mount during 2024 and the years immediately ahead. The intensity of the near-term pressure, however, seems likely to be influenced by the upcoming presidential election. • The next
Slide 17: Discussion Topics
Discussion Topics • Are we going back to the 1990s? • Where are other actors on today’s mass torts? • Push back! What about… • Parting thoughts: elections have consequences Research and Analysis for Insurance Professionals 17
Slide 18: Are we going back to the 1990s?
Are we going back to the 1990s? • 1990s presented a perfect storm for the original mass torts – A&E • Laws granting the federal government authority to force cleanup were in place: RCRA 1976, CERCLA 1980 • 1992 Democratic National Platform prominently highlighted environmental goals: • “To protect t
Slide 19: Are we going back to the 1990s? (NPL sites and EPA budget)
Are we going back to the 1990s? 60% of sites on the NPL* were added by 1990. The issue was getting clean A surge in the budget and workforce ups started. at the EPA catalyzed activity 275 100% $15.0 20,000 250 90% $14.0 225 18,000 80% 200 Incremental NPL Sites Added 70% $13.0 Cumulative % NPL Sites
Slide 20: Are we going back to the 1990s? Other actors
Are we going back to the 1990s? • Other actors played a major role in events that led to P/C reserve charges • SEC promulgated new disclosure rules in 1993 (SAB 92) • Required companies to display contingent liabilities on face of B/S separately from potential recoveries from third parties • “While
Slide 21: Loss Reserve Charges for A&E
Are we going back to the 1990s? Loss Reserve Charges for A&E $9.0 Will the existing mass torts manifest $120.0 The convergence of Mainly “A” similarly to A&E w/ large increases these many forces $8.0 resulted in material followed by a pay as you go? $100.0 P/C reserve $7.0 strengthening for E Plenty
Slide 22: Where are other actors on today's mass torts?
Where are other actors on today’s mass torts? • A: From our perspective, in the early innings of taking a stance • Rating Agencies • All have expressed concern • PFAS liabilities relevant for rating actions on manufacturers of PFAS • We’re not aware of specific contemplation of today’s mass torts in
Slide 23: Push back! What about…
Push back! What about… • SCOTUS in West Virginia vs. EPA • Imposed limits on EPA’s ability to regulate greenhouse gas emissions • Our view: Different cases! EPA has for decades identified hazardous chemicals, PRPs and enforced remediation • SCOTUS acceptance of ‘major questions’ doctrine • Says “…co
Slide 24: Parting Thoughts: Elections Have Consequences
Parting Thoughts: Elections Have Consequences $15.0 20,000 Private actions seem certain to continue … the mass tort machine is $14.0 18,000 firing on all cylinders. 2025-2028? But actions by the $13.0 federal government and 16,000 other actors will play a material role in $12.0 supercharging, or not
Slide 25: Appendix: Background and Sources
Appendix: Background and Sources © Verisk Analytics, Inc. All rights reserved. 25
Slide 26: PFAS Background: Emerging Issues
PFAS Background: Emerging Issues Emerging Issues PFAS Page • Primer pieces on PFAS • Regularly updated newsfeed curated by Emerging Issues staff • Research articles in reverse- chronological order Emerging Issues Newsletter • Weekly market intelligence on emerging risks Questions: • EmergingIssues@V
Slide 27: Sources
Sources "The association between per- and polyfluoroalkyl substances (PFASs) and brain, esophageal, Slide 4: EPA Primary Drinking Water Regulation melanomatous skin, prostate, and lung cancer using the 2003–2018 US National Health and Nutrition Examination Survey (NHANES) datasets," Heliyon, January
Slide 28: Thank you! Questions?
Thank you! Questions? Contact us: emergingissues@verisk.com THE INFORMATION, VIEWS AND OPINIONS EXPRESSED IN THIS PRESENTATION ARE SOLELY THOSE OF THE PRESENTER AND DO NOT NECESSARILY REFLECT THE VIEWS OR OPINIONS OF VERISK ANALYTICS, INC., (VERISK ANALYTICS®) OR INSURANCE SERVICES OFFICE, INC. (ISO