Earlier this month, the Environmental Protection Agency (EPA) took a significant step by finalizing regulations that establish limits on PFAS chemicals found in drinking water.
This marks the first time a national restriction has been imposed on these persistent pollutants, commonly referred to as "forever chemicals," for water providers across the United States.
Aaron Weinstock, national practice leader (E=environmental) at BFL Canada, spoke with Insurance Business to discuss the ripple effect these new regulations will have on the Canadian market.
PFAS, or per- and polyfluoroalkyl substances, are a group of chemicals used in making coatings and products that resist heat, oil, stains, grease, and water.
“It's the stuff you find in Teflon coating – and there’s a lot of scrutiny about it. It's very pervasive. It’s in our soil, and groundwater. It’s everywhere,” said Weinstock.
While the EPA is an American agency, Weinstock notes that Canadian markets typically mirror the US, anticipating that the recent PFAS regulations will likely influence trends across the Canadian environmental insurance market.
“We tend to follow the US in terms of regulation. We're a couple years behind sometimes, but we're looking to see how the US PFAS experience goes to see how that might impact us in the future,” he said.
Weinstock observed that PFAS exclusions in the environmental market are currently in a “holding pattern,” with environmental brokers and insurers remaining cautious of writing coverage for the chemicals.
While some insurers are completely excluding PFAS, others are being selective on which types of business they will exclude it on.
“The challenge with PFAS is that the regulations are very new. And because of how widely spread this chemical is, insurers are trying to calibrate how they will cover it, or not cover it for environmental,” Weinstock said.
Weinstock noted that the introduction of Bill 96 has instigated uncertainty within the environmental insurance sphere.
Introduced in 2022, the Quebec legislation is aimed at safeguarding the French language. Within the insurance sector, the bill mandates that contracts with clients in Quebec must be written in French first.
“BFL is a Quebec headquartered company, so a lot of our business comes out of Quebec and Bill 96, with its language laws, has made it a challenge for some insurers to participate in the market, because they either don't have their forms written in French, or they're uncomfortable with the changes brokers have to make to do that business.”
Weinstock said that while there are exceptions for English language under the bill, some environmental insurers may not be equipped to handle French reports.
“You can get English language wordings if it's not a contract of adhesion, so if it’s more customized, which most of environmental insurance is, but there's still uncertainty with how to best address that from the insurance perspective.”
Highlighting the practical challenges imposed by Bill 96, Weinstock said, “In environmental insurance, extensive underwriting is common, and some companies lack the capacity to handle substantial quantities of French reports.
“Some insurers just don't want to deal with it and haven't done that yet. I think it'll smooth itself out in the next couple of years.”
