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When chemicals in consumer products are connected to health problems, it often leads to legal action. Certain synthetic chemicals known as PFAS (Per- and poly-fluoroalkyl substances ) or forever chemicals are becoming a new risk area for humans and insurers alike. Whereas they may have many industrial and commercial uses, they can leach into soil and groundwater from landfills. 

PFAS are found in many consumer products like non-stick pans, stain-resistant fabrics, and packaging, and ingesting them causes a plethora of health problems. Asbestos was first associated with serious illnesses like cancer in the late 1960s. PFAS are now being compared to asbestos in terms of potential health risks. Insurance companies may start making businesses that use PFAS legally responsible through policies.  

Why Worry About PFAS?

With PFAS lawsuits on the rise, insurers have good reason to be worried about potential liability related to PFAS chemicals. High-energy processes are needed to effectively destroy PFAS chemicals. Just one major lawsuit or settlement could bankrupt an insurance company, given the enormous costs associated with PFAS cleanup and remediation. Consequently, insurers increasingly put exclusions in their policies to avoid covering companies connected to PFAS.

PFAS Impact on Insurance Policy

Three main areas of insurance could be affected by forever chemicals:

• Employer's liability coverage: This applies if employees were exposed to chemicals during manufacturing and could face health issues depending on how extensive and long the exposure was.
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• Public and product liability: This relates to situations where members of the public or their property suffered harm from exposure.
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• Environmental impairment or pollution liability: This would cover clean-up costs if chemicals leaked and contaminated soil, water, or air.

Some experts think liability claims related to forever chemicals could be long-lasting, similar to asbestos. There are also environmental impacts to consider. Some insurers have already added exclusions for forever chemicals in their policies. It's important to check your policy coverage and whether it addresses potential liabilities from exposing people or the environment to PFAS chemicals.

Minimizing Insurance Risks

There are several steps companies can take to minimize their risk related to PFAS. 

Evaluating Your Company's PFAS Exposure Risks

Companies should carefully look into and understand if their work has anything to do with PFAS chemicals. They should also know what substances and materials could cause PFAS issues and reduce their exposure in the workplace, wherever possible. 

Captive Insurance

Business owners might also want to set up captive insurance. A captive insurer allows a company to self-insure and tailor coverage specifically for their PFAS and other hard-to-insure emerging risks. This gives the company more control over the types and limits of coverage provided compared to relying on off-the-shelf commercial policies.

Stretching the Policy and Getting a Sublimit

Talk to your broker and see if the insurance company will allow your current policy to be stretched out. Stretching the policy means it would stay the same for a longer period, rather than risk the insurance company adding exclusions or charging more when it's renewed. Try to get sub-limit coverage just for pollution liability. A sub-limit restricts the maximum amount the insurer will pay for a specific type of loss, coverage, or claim.

Endnote

It looks like these "forever chemicals" will cause issues forever for insurers and businesses. There aren't simple answers. However, talking openly between companies and their insurers is important. Being proactive also helps, like inspecting products or testing water sources. With some creative thinking and people working together, we can find practical ways to handle new risks.