What is PFAS?
Dubbed as the “forever chemicals” and “the next asbestos”, PFAS is a large group of complex synthetic chemicals that has been used in various consumer products since the 1950s. PFAS is broadly used in the manufacturing of water resistant, stain resistant and non-stick goods that are used in a range of applications from Gore-Tex materials and anti-adherent pans to firefighting foams.
Risk Factors
The main risk factors with PFAS are:
- Widespread historical use: PFAS has been widely used in consumer products for more than 50 years and can now be isolated from various environmental and food samples.
- Environmental persistence: Due its very stable chemical structure, PFAS molecules does not degrade in the environment and continues to persist, hence the name “forever chemicals”.
- Health effects: Even though the understanding of the health effects of PFAS is currently incomplete and fragmented, the exposure has been linked to health issues such as low birth weight, thyroid issues, testicular cancer and increase in cholesterol among many other symptoms.
- Bioaccumulation: PFAS molecules cannot be metabolised and hence slowly build up in the body of animals over time, which further increases the potential health risks.
The next asbestos?
Similar to asbestos, the widespread use and persistence of PFAS in our society makes the scale of PFAS exposure and its potential financial impact through litigation quite significant.
PFAS exposure has been linked to several health issues however, the science is far from settled on this matter. Unlike asbestos, where the connection between historical asbestos exposure and the diagnosis of mesothelioma cancer was established and accepted, there is no “signature” disease that is linked to PFAS. Hence the current litigations are full of questions regarding scientific causation and evidentiary standards governing liability. For further reading on the comparisons of asbestos and PFAS and its potential on the insurance industry, refer to the article here, and for information on current ongoing PFAS litigations, read this article.
Current Regulation
The regulatory landscape of PFAS is rapidly changing with several countries imposing bans or voluntary approaches for minimising the manufacture, import, sale and use of PFAS. Example is the EU REACH proposal in 2023 that requires PFAS restrictions to be effective in 2026. For more information, refer to the article here.
PFAS Litigation
As always with litigation, the USA is leading the way. The first PFAS related case was brough in 1999 and to date there have been more than 10,000 cases involving more than 500 companies. Known settlements now exceed more than $16 Billion for property damage, environmental damage and health impact claims. The two companies impacted the most are Dupont (manufacturers of Teflon) and 3M (manufacturers of AFFF foam for firefighting).
Insurance Implications
The presence of PFAS has the potential to create a range of insurance issues:
- Liability exposures – claims for environmental damage or health impacts where a direct link can be made between a contaminated product and the effect.
- Environmental Impairment – particularly an issue where policies are in place and regulations tighten requiring clean-up to occur.
- Product Recall and/or Business Interruption – contamination found in a product may require the product to be recalled and/or replaced leading to significant loss of sales.
Brokers and clients should be conscious of the presence of PFAS exclusions.
At present @Risk Underwriting does not have a standard PFAS exclusion but can apply it based on underwriters’ judgement.
For more information and enquiries, please contact us.
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