Per- and polyfluoroalkyl substances
PFAS
Per- and polyfluoroalkyl substances (PFAS) are chemical products, that have been used in everyday household and industrial products since decades.
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Examples for industries that use PFASs are:
- Semiconductor manufacturing, automotive and electrical industry
- Lithium-ion battery and fuel cell manufacturing (mobile phones, E-cars)
- Paper industry (e.g. printed products, food packaging, adhesive labels)
- Textile industry (e.g. outdoor and work clothing, furniture)
- Medical devices industry (e.g. incubators, ventilators, stents)
- Mechanical and plant engineering (e.g. wind turbines, heat pumps)
The group of PFAS substances now comprises more than 10,000 different compounds. As their composition is thermally and chemically very stable, PFAS are so called “long-lasting” or ”forever chemicals”. They hardly decompose or disintegrate and are unable to break down naturally, because they contain many carbon and fluorine bonds, which are known as very strong bonds in organic chemistry. As PFAS are synthetic chemicals that are used within thousands of products and are resistant to heat, oil, dirt and moisture, an exposure is difficult to avoid. The very qualities that made PFAS so useful pose potential adverse effects for the environment and human health. Due to their mobility and bioaccumulation properties PFAS can now be found nearly everywhere in the environment (soil, water, plants, air), even in the blood of people and animals. Against this background, this “wonder product” of the 20th Century and its legacy could create long-tail liability issues well into the 21st century and beyond.
In recent years however, as some PFAS have been classified as hazardous, the issue of PFAS and their consequences for the environment have received increasing attention. Especially in North America, Europe and Australia science, politics and society started to study and measure the concentration of PFAS in our environment to evaluate and discuss its direct and indirect effects on the human body as well as on nature and initiated attempts to ban or restrict the use of PFAS.
Two compounds attracted special public and scientific attention over the last decade for their pervasiveness and environmental impact: Perfluorooctanesulfonic acid (PFOS) and Perfluorooctanoic acid (PFOA). There is growing evidence of potential negative health effects of PFOS and PFOA, making them the most studied and regulated PFAS substances to date. Nowadays, however, several other PFAS substances are being scrutinised by various regulating authorities around the world. Due to the enormous variety of PFAS compounds, a large part of the substances has not yet been investigated at all.
Risks, injuries, and damages can result from direct as well as from indirect exposure. The contamination with PFAS may lead to health, property and environmental risks and damages. Possible health effects include e.g. cancer, decrease of fertility, or a weakened immune system, although no specific PFAS “signature disease” has yet been identified in comparison to Asbestos.
However, it should be noted that the risks are not necessarily the same for all PFAS and may also depend on many additional factors. Although the growing number of studies show a potential link between exposure to PFAS in the environment and harmful health effects on human and animal health, the high number and wide distribution of PFAS makes it challenging to determine the exact source, intensity and/or relevant timing of contamination and/or of bodily injury - and consequently to prove a necessary causal link between the PFAS exposure and the potential damage.
Irrespective of the scientific evidence, there are already a large number of lawsuits worldwide, currently focussing on the US, in which the companies concerned have been ordered to pay high damages or settlements have been reached. The plaintiffs seek damages for groundwater and/or soil contamination, bodily injury, medical monitoring costs, breach of express warranty, and misrepresentation among others. The field of defendants (and potential insureds) is steadily expanding, to include all industries manufacturing or using PFAS. In the context of these lawsuits the causation between the PFAS exposure and the potential resulting damage is a highly discussed issue. The most discussed issues so far are the causation between the PFAS exposure and the potential damage as well as the applicability of existing pollution exclusions.
It is to be expected that the wave of lawsuits that can be observed will continue to increase in the coming years worldwide. At the same time, global regulation by different regulatory authorities is becoming more restrictive with the aim of generally banning or largely limiting the use of PFASs. The (re)insurance industry must adapt its underwriting policy to these developments. (Re)insurers should understand and get an overview of the different industries in their portfolio which are, or might be, impacted. Potential PFAS exposure or PFAS related claims can be faced in various lines of business, e.g. general-, product- and environmental liability, workers’ compensation and D&O.