Insurance companies consider drastic action to avoid unprecedented health claims: 'An increasing problem'
The threat of per- and polyfluorinated alkyl substances, or PFAS, to spur litigation on a mass scale has led an insurance trade association in Germany to encourage insurance companies to reduce related protections in their commercial and product liability policies.
PFAS are synthetic chemicals commonly found in non-stick cookware, waterproof clothing, stain-resistant furniture, and many other household items. They are also known as "forever chemicals" for their ability to linger in the environment and in human bodies.
Because exposure to PFAS has been linked to a myriad of health concerns, there are not only growing fears about the impacts of these chemicals on wellness but, for those in insurance, also the extent of the business liability that could be tied back to them. In response, the German Insurance Association, which represents the industry's interests, recently recommended that firms write PFAS damages out of their commercial and product liability plans as well as plans covering environmental risk, according to a mid-April report from Euractiv.
The Lever reported in 2024 on the removal of PFAS coverage from some policyholders in the United States. The move may bear some similarity to insurance companies dropping homeowners' coverage for those in areas at high risk of damage from severe flooding and wildfires.
Manufacturers may argue that PFAS are essential to upholding modern product quality. But the expanding body of research on the potential health repercussions of PFAS accumulation in humans, combined with an increasing number of related lawsuits, seems to have insurers inclined to view PFAS-containing products and contaminated water systems as major financial vulnerabilities.
The United States Environmental Protection Agency has indicated that PFAS exposure may be associated with reproductive issues, developmental delays, increased cancer risks, and more.
Per Euractiv, the German bank LBBW said in 2024 that PFAS liabilities could be "the most expensive claim in [the insurance industry's] entire history."
While the deputy general director of the German Insurance Association, Anja Käfer-Rohrbach, carved out room in the new guidance for firms to negotiate PFAS coverage, she also said, "Ideally, the PFAS clause will also help to more quickly develop real alternatives to the dangerous forms of these perpetual chemicals."
While it's possible that an insurance firm declining to cover a manufacturing company's PFAS liabilities might hypothetically discourage that company from using the chemicals in their products, there's significant risk that the costs of cutting commercial PFAS coverage could fall hardest on consumers, small businesses, and those seeking legal remedies to address PFAS exposure. And, going forward, there are likely to be many seeking such redress.
In 2024, the New York Times reported that a lawyer speaking at a conference that year said PFAS litigation could "dwarf anything related to asbestos." In the same report, the Times observed PFAS exposures have the potential to impact just about everyone, unlike other highly litigated products such as tobacco, since "forever chemicals" are in so many consumer goods and in water systems too.
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In 2023, the U.S. Geological Survey estimated that around 45% of the country's drinking water could contain at least one PFAS. The European Environment Agency found that, from 2018 to 2022, "51-60% of rivers, 11-35% of lakes and 47-100% of transitional and coastal waters" contained PFAS at levels above environmental quality standards.
In Germany, Euractiv reported, the "Association of Energy and Water Industries has called PFAS contamination in water resources 'an increasing problem' and has suggested ways to finance lawsuits against PFAS manufacturers over damages to things like municipal water supplies."
Regardless of whether the German Insurance Association really hopes its guidance will encourage the development of PFAS alternatives, manufacturers could choose to phase out the chemicals themselves.
We could also see more investments in innovative methods and technology to clean up PFAS. For example, a team of scientists from the University of Oxford and Colorado State University is currently working on using phosphate salts to break down the chemicals.
In the meantime, monitoring efforts and support for pro-environment policies could help to limit exposures. Because PFAS stick around for so long, commitment to long-term efforts will be key.
Individuals might work to limit their own personal exposure by opting for PFAS-free alternatives to household items. Swapping out non-stick cookware and using your own glass or stainless steel containers to bring leftovers home from restaurants are some places to start.
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