STUTTGART (dpa-AFX) - According to the Landesbank LBBW, hazardous perpetuating chemicals could cause the insurance industry the most expensive loss in its history. Possible claims for damages due to the extremely long-lived per- and polyfluorinated alkyl substances (PFAS) threaten to hit the industry even harder than the asbestos scandal of the 20th century, writes LBBW insurance analyst Werner Schirmer in a study published on Tuesday. The expert believes that insurance losses of more than 100 billion US dollars (92 billion euros) are possible.

For example, the US conglomerate 3M agreed to pay up to 12.5 billion dollars in the USA last year. Water suppliers had sued the manufacturer because perpetual chemicals in fire-extinguishing foams from 3M had been leaking into the groundwater for decades. And there are further lawsuits in connection with damage to natural resources. Private individuals are also suing for damage to their health. PFAS are also used in cosmetics, cookware, paper coatings, textiles and car and ski waxes.

Analyst Schirmer refers to data from the insurance service provider Praedicat. In extreme cases, Praedicat expects compensation in the three-digit billion dollar range for consumer lawsuits in the USA. "The risk of PFAS causing higher insurance claims than asbestos does not appear to be insignificant," concludes the analyst. However, some insurers are now excluding environmental pollution from their corporate liability policies. This makes forecasting more difficult.

Asbestos was used for a long time in walls, pipes and fireproof clothing. Inhaling asbestos fibers, especially in construction and industry, caused many people to develop lung cancer. The use of asbestos has now been banned in Germany and the EU, but it is largely permitted in the USA and many other countries.

According to the rating agency A.M.Best, which specializes in insurers, primary insurers and reinsurers have already paid out 100 billion dollars for asbestos claims in the USA alone by the end of 2022. This is roughly equivalent to the amount that insurers worldwide will have paid out for natural catastrophe claims in 2023.

With regard to PFAS, Schirmer expects that, as with asbestos, US companies in particular will be sued. However, the German chemical company BASF is also facing thousands of PFAS-related lawsuits in the United States - including for fire-fighting foam.

According to Schirmer, it is currently difficult to predict the extent to which European insurers will have to pay for PFAS cases. However, reinsurers are likely to be hit harder than primary insurers.

Schirmer believes that the Swiss reinsurer Swiss Re is at the highest risk. This is followed by the German industry giants Hannover Re and Munich Re as well as the Swiss insurer Zurich. According to Schirmer, the German Talanx Group (HDI) is also likely to be hit harder, especially as it owns a good 50 percent of Hannover Re./stw/mne/mis