The term forever chemicals is increasingly used in discussions around environmental and health risks, raising concerns for governments, environmental bodies, and insurers.
What are Forever Chemicals?
Per- and polyfluoroalkyl substances (PFAS), Perfluorooctanoic acid (PFOA), Perfluorooctane sulfonate (PFOS), Perfluorooctane aulfonic acid (PFBS), and pre-cursor chemicals such as Perfluroroalkyl acid (PFAA) are a group of synthetic chemicals widely used in industrial and consumer products, and are often referred to as forever chemicals because of their high persistent and resistance to breaking down. These ‘forever chemicals’ are enduring in the environment and the human body, raising significant health and ecological concerns for governments, environmental bodies, and insurers alike.
Why are Forever Chemicals used?
Specifically in relation to PFAS, the chemical composition makes these substances oil and water repellent which, along with temperature resistance, makes them an ideal candidate for use in:
- Paint
- Food packaging
- Furniture sprays
- Firefighting foam
- Contact lenses
- Cosmetics
Reports suggest that at their creation the toxicity to both the environment and human body was not widely known, accepted or reported on, and as such the ramifications and health risks of their use are only now starting to be understood.
What are the insurance implications?
Significant litigation in the US has caused insurers to take note across the globe, where a company may have a PFAS exposure, as the risk and probability of lawsuits against manufacturers and end-users has largely increased.
Typically, exposed insurance policies are those indemnifying a company’s legal liability, namely:
- Third Party and Employers’ Liability
- Environmental / Contractors Pollution placements
- Directors’ & Officers’ policies
Insurers current concern relates to the direct use of applications that could put these chemicals out into the environment. Often this leads to a focus on firefighting systems ranging from the foam added to aerial firefighting, through to the liquid stored / used for sprinklers and beyond.
Companies in certain sectors, which insurers deem to potentially be higher risk, will likely be asked to confirm their PFAS exposure and, depending on the answers, could face sublimited coverage or potential forever chemicals coverage exclusions.
Next Steps
It’s important to engage with your insurance broker to ensure that an adequate risk management plan is put in place for those who have identified a ‘forever chemical’ use and exposure, and to present this correctly to Insurers to allow them to consider a more bespoke response than a standard exclusion.
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