Max Dorfman, Analysis Author, Triple-I
Per- and Polyfluoroalkyl Substances (PFAS)—a assorted group of human-made chemical substances utilized in an array of shopper and industrial merchandise—current a brand new potential legal responsibility for insurers, as U.S. regulatory exercise continues to alter, with lawsuit outcomes indicating this is a matter that may proceed to develop.
PFAS, which have existed because the Thirties, are creating concern due to how ubiquitous they’re, in addition to their potential to hurt folks’s lives. They’re utilized in all the things from Teflon coatings to meals packaging to firefighting foam, as a result of their capability to withstand oil and moisture. These qualities are additionally probably damaging as a result of they typically keep within the human physique, by no means completely breaking down.
Although research surrounding PFAS should not conclusive, they’ve been linked to most cancers, pregnancy-induced hypertension, and thyroid illness. Their pervasiveness means everybody possible has some quantity of PFAS of their blood stream. There’s worry about their presence in water provides, as properly.
“PFAS are water soluble and dissolve readily in soil,” mentioned Cindy Wilk, International Environmental Legal responsibility Skilled, Allianz Threat Consulting at AGCS. “An industrial accident or firefighting incident can lead to their launch into water sources, making native communities susceptible, however PFAS may migrate rapidly by way of groundwater pathways to infect areas removed from their unique supply.”
PFAS litigation continues to rise
PFAS litigation has seen super development over the previous 20 years, starting with a lawsuit filed towards DuPont, the corporate that makes Teflon. DuPont was accused of contaminating water from a plant in West Virginia—leading to a settlement to offer as much as $235 million for medical monitoring of over 70,000 folks. A number of related lawsuits have adopted.
As of 2021, greater than 5,000 PFAS-related complaints have been filed in 40 courts, with 193 defendants in 82 industries.
Moreover, in 2021, the PFAS Motion Act handed the Home and set the Environmental Safety Company (EPA) on the current course towards creating new PFAS requirements. The act doesn’t embody a legal responsibility exception for water-wastewater utilities, although these entities should not the supply of PFAS, thus inflicting concern that they would be the goal of civil litigation
How can insurers reply?
Though the Insurance coverage Companies Workplace (ISO) has not produced a PFAS-specific exclusion for industrial legal responsibility insurance policies, work is being completed on a draft exclusion, which might be printed in late 2022. With that course of nonetheless underway, a number of PFAS-related exclusions are circulating, some as a modification to the Whole Air pollution Exclusion or by establishing a stand-alone PFAS exclusion. Nonetheless, insurers should be cautious of the potential liabilities, because the Biden Administration’s regulatory concentrate on PFAS may result in elevated litigation.
Reinsurer Gen Re recommends that insurers:
- Take stock of beforehand underwritten dangers;
- Fastidiously think about new dangers at submissions; and
- Preserve abreast of PFAS, each as to scientific developments and the litigation that it spawns.