Editorial: Limiting exposures to ‘next asbestos’

In a liability context, so-called forever chemicals carry an ominous-sounding name for underwriters and risk managers, suggesting a problem that’s not going away.

U.S. corporations and their insurers have been burnt badly by similar liabilities in the past, most notably asbestos and pollution claims, and ever since have been wary of potential long-tail losses.

Every few years, a mass tort exposure is labeled “the next asbestos” — for example, lawsuits related to lead paint, tobacco or opioids — raising concerns about another liability disaster that could drive numerous insurers into bankruptcy and reshape the industry.

Forever chemicals, or perfluoroalkyl and polyfluoroalkyl substances, are the latest compounds to be dubbed with the “next asbestos” sobriquet, and insurers must be hoping that they don’t live up to the billing.

According to A.M. Best Co. Inc., which has tracked asbestos claims over the past three decades, the insurance industry has been placed on the hook for $100 billion in asbestos losses since the substance was first flagged as a health concern in the 1970s. When you add in environmental claims, the total is $146 billion. While claims payments have slowed, over the past five years insurers have still paid out $14 billion in asbestos and environmental claims, according to Best.

The insurance industry reacted to asbestos and pollution claims with exclusions and other policy changes, and general liability underwriters have been inserting exclusions related to PFAS in many policies over the past few renewal cycles. Recent exclusions, though, can only do so much to limit exposures because PFAS have been used in products and manufacturing processes for years, leaving the possibility that old policies will be tapped for coverage.

Everything from non-stick cookware to household cleaning products and cosmetics have been shown to contain PFAS. Numerous lawsuits have been filed alleging the chemicals caused serious health problems to consumers and multi-hundred-million-dollar settlements have been paid. And, as we report here, it’s not just a concern for general liability underwriters, workers compensation insurers are worried about claims workers may file saying they were injured through exposure to PFAS at work.

Litigation over insurance coverage is still playing out, but however it falls, companies with potential exposures to PFAS should proactively work to mitigate their potential liabilities. Experts advise evaluating products and processes to identify sources of contamination, regularly testing for PFAS, reducing the use of PFAS wherever possible, keeping on top of evolving regulations and working with insurers to understand the potential liability exposure.

In addition, companies should work with local communities and consumers to address concerns and provide information.

Some of the damage from PFAS is already done, but by taking concrete steps to address the problem, insurers and risk managers may be able to shorten forever chemicals’ run as the lead player in the “next asbestos” saga.