PFAS Risks in the UK and Europe

You want some things to last forever, but dangerous chemicals aren’t one of them. Per- and polyfluoroalkyl substances (PFAS) are often called forever chemicals. Watchdogs are raising the alarm about the potentially harmful effects of forever chemicals, which could result in manufacturers facing mounting liability. Brokers and their commercial clients need to keep an eye on this emerging issue.

What Are Forever Chemicals?

The UN Environment Programme describes PFAS as toxic, manmade, hazardous chemicals with dangerous effects on the environment and human health. Scientifically speaking, chemicals in the PFAS family are synthetic organic chemicals with completely or partially fluorinated carbon chains. Thousands of different chemicals are classified as PFAS. They all have a stable structure that is resistant to heat, fire, stains, water, grease, and friction, making them useful in multiple industries. Many common goods use PFAS, including water-repellent clothing, non-stick cookware, stain-resistant carpet, and cleaning agents.

According to the European Environment Agency, PFAS are extremely persistent in bodies and the environment, hence the nickname “forever chemicals.” PFAS have been linked to various health problems, including liver damage, thyroid disease, obesity, cancer, and fertility issues.

Forever Chemicals Are Everywhere

The European Environment Agency says it’s impossible to conduct an in-depth risk assessment of PFAS due to the sheer diversity of chemicals in use. However, monitoring activities have shown that PFAS are prevalent in the environment. The production and use of PFAS have led to the contamination of water supplies in European countries, and PFAS have been detected in the blood of European citizens.

Proposed PFAS Bans

Amid growing concerns over the long-term effects of PFAS chemicals, some governments have considered banning the chemicals.

The European Chemical Agency says one group of PFAS chemicals – perfluorooctane sulfonic acid and its derivatives (PFOS) – have been restricted in the European Union for more than a decade under the Persistent Organic Pollutants Regulation. PFOS chemicals are also included for elimination in the international Stockholm Convention.

Bloomberg Law says the EU has proposed a PFAS ban on approximately 10,000 substances. This ban would be phased in through the late 2030s. Since it would impact thousands of products, pushback was inevitable. For example, Reuters says the pharma lobby has warned that the ban would negatively impact drug production. According to The Guardian, the ban was not included in recently leaked policy proposals, leading the newspaper to say the EU has abandoned its promise of a ban.

Nevertheless, stricter rules may be coming in Europe and abroad. In the United States, California is leading the trend, with bans on PFAS in textiles and cosmetics, according to Safer States. Washington and New York are considering similar bans.

Litigation Over Forever Chemicals

Although regulatory change may be slow, litigation surrounding “forever chemicals” has already occurred. TIME predicts that PFAS litigation could eclipse settlements over tobacco, whereas the EUobserver says investors think forever chemicals could be the “new asbestos.”

In the US, Safer States says 27 attorneys general have already filed lawsuits over forever chemicals, including 13 that filed lawsuits in 2023. According to AP News, 3M will pay a minimum of $10.3 billion and possibly as much as $12.5 billion to settle lawsuits claiming that forever chemicals used in firefighting foam and other products have contaminated public drinking water systems.

3M may also face massive costs in the Netherlands, where the government has said it will hold the organization liable for polluting the Western Scheldt River, according to Reuters. In addition, Insurance Day says PFAS-related claims have increased in the EU and a similar rise in litigation could be coming to the UK.

Insurance Coverage for PFAS Exposures

Businesses may seek coverage for PFAS liability under environmental and pollution liability policies. However, Bloomberg Law notes that insurers have argued they are not liable for PFAS-related claims.

As litigation risks grow, PFAS exclusions may become more common. Indeed, the Independent Insurance Agency & Brokers of America says the ISO has introduced forms that exclude coverage for PFAS. The Lloyd’s Market Association has also published exclusion clauses for PFAS. According to Lexology, these clauses were recently updated to include common examples of PFAS substances. The new clauses are LMA5595A and LMA5596A.

Helping Your Clients Navigate PFAS Risks

For businesses involved in the manufacturing of PFAS products, the recent rise in litigation and regulatory activity may be alarming. As business leaders assess their risks, they will likely be looking for insurance coverage. However, coverage may not be readily available. Brokers should be aware of these PFAS exclusions and make sure their clients understand their coverage.

This Article is brought to you by Costero Brokers