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Case study

Maximising insurance recovery for a manufacturer’s PFAS claim

23/05/2024

The challenge

A residential and commercial flooring manufacturer was named as a defendant in a complaint regarding environmental contamination resulting from the use of perfluoroalkyl and polyfluoroalkyl substances, often referred to as PFAS. The complaint alleged that the client and other entities had used chemicals within the PFAS family of substances — a group of non-biodegradable chemicals that are under increased regulatory scrutiny — in their manufacturing process, resulting in contamination of the surrounding area's surface and groundwater.

The solution

Specialists from Marsh Advisory’s Complex Liability Consulting Practice helped the client to identify potentially applicable insurance coverage and to recover losses covered by their current and legacy insurance policies. The team took a three-pronged approach to assist the client in navigating the complex coverage issues:

  • Insurance archaeology. Damages from PFAS can be alleged to begin upon their first release into the environment. The client first started using these chemicals in their manufacturing process in the early 1970s, which meant they needed to identify and locate copies of the insurance policies that were in effect since then. Our complex liability insurance archaeology experts were engaged to assist in locating this insurance information. Our team was able to identify copies of virtually all policies necessary to respond to the loss, as well as significant secondary evidence of the policies for which copies could not be located. Our efforts were instrumental in ensuring that missing insurance information would not lead to the client being held responsible for any claim costs that would otherwise have been covered under the policies.
  • Policy analysis and archiving. In order to help the client understand their available insurance coverage, our specialists reviewed the located insurance policies and captured detailed summaries of the coverage in our proprietary, web-enabled policy archiving tool — Insurance Coverage ExplorerTM (ICE). Our specialists used ICE to analyse the pertinent coverage terms, limits, conditions, and exclusions, and created graphical coverage charts displaying the insurance information. We prepared a comprehensive report outlining the potential coverage issues that the insurers may raise in the context of PFAS claims.    
  • Claims management and claims advocacy. Building upon the foundation of our coverage analysis work, our specialists were engaged to manage the claim and pursue the insurance recovery from the insurers. We worked with the insurers early in the process and maintained an active flow of communication. This reduced the risk that insurers would delay coverage decisions due to insufficient information or assert late notice or lack of cooperation arguments. It also allowed our team to present the most favourable coverage positions to the insurer group and negotiate from a strong position. Our specialists have years-long expertise in policy analysis and knowledge of existing case law, which was critical in developing the optimal insurance recovery strategy and support coverage arguments that were in favour of the client. This proactive and thoroughly informed approach enabled us to present  advantageous coverage theories and negotiate aggressively with the insurers to achieve optimal recoveries.

The results

As a result of the complex liability team’s work, the client recovered over $20 million of defence and indemnity costs associated with this PFAS claim. We continue to work with the manufacturing company and regularly follow up with insurers to make sure they adhere to cost-share agreements and make timely payments. In the event that policies actively contributing to claims payment are exhausted, our team will collaborate with insurers on the next available layer of coverage so they are ready to participate.

Our team continues to provide the client with regular updates on changes in the insurance coverage landscape that may impact future recoveries and advise them on actions they should consider to minimise any negative impacts.

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