Risk & Business Magazine JGS Insurance Spring 2020 | Page 27

PFAS
The Price Of
Consumption:
PFAS AND LIABILITY
P
FAS (perfluoroalkyl and
polyfluoroalkyl substances)
are a class of chemicals that
have been grouped together
for decades and utilized in a
wide array of consumer products. They
have also been linked to organ damage,
decreased fertility, and a slew of other
malicious conditions when they enter the
human body. Unfortunately, up to 110
million Americans today might already
be contaminated with PFAS through
drinking water, contaminated air, and
contaminated food. Many experts are
comparing the situation, in terms of
liability, to that of asbestos in years past.
Thus, many insurance agents and brokers
are beginning to look at evaluating the
risks their clients may be facing in terms
of PFAS contamination liabilities.
Both chemicals are manufactured
by 3M and DuPont, who have seen
both regulatory actions and class-
action lawsuits in the past based on
the contamination of drinking water.
Lawsuits, however, extend further
than just the manufacturers of those
chemicals. Companies that make
products using PFAS or containing PFAS
are likely to be on the hook during the
next cycle of litigation. Following that,
the retailers that sell those products will
likely come next, forming a triple-threat
of liability trickling all the way from the
manufacturer to the consumer revolving
around three types of potential litigation:
toxic tort claims, product liability, and
environmental cleanup liability.
On the bright side, these chemicals
are no longer manufactured in the
United States. The flip side of that coin,
however, is that many landfills are still
contaminated with PFAS as well as
their surrounding environments. This
gets compounded by issues such as the
wildfires in California. Additionally, the
chemicals are still being manufactured
and distributed in many third world and
developing nations.
For brokers, this means that clients who
are possibly on the hook should meet
with their brokers to discuss personal
injury liability, environmental cleanup
liability, and product liability at the very
least. The status quo may not cut it in
some of these situations, particularly
with older policies. Businesses could
potentially be staring at billions of
dollars in damages. The industry can
handle it, but there will very likely be
casualties. The main problem is whether
or not clients understand what coverage
they need and whether or not they decide
to take that coverage.
It is estimated that only about 20 percent
of insurance buyers are going to make a
purchase for environmental risk transfer
products. The rest will take a pass
on that type of coverage. Fortunately,
some older policies may already cover
PFAS exposures. The problem becomes
twofold: ensuring current coverage can
handle issues as they arise by convincing
clients of the need (should they have
it) and determining whether older
environmental policies will be applicable
to PFAS exposure issues.
Do you think your company may have
an issue in this area? It’s important to be
sure, either way. +
BY: GWENYTH P. LUU, CLCS
DIRECTOR - COMMERCIAL LINES
JGS INSURANCE
Gwenyth Luu helps organizations
improve their bottom line and lower their
total cost of risk by implementing the
JGS Proactive Service Platform. The JGS
Proactive Service Platform is an inclusive
strategy that focuses on primary cost
drivers of a risk management program.
Gwenyth helps businesses understand
all of their potential and actual costs
and liabilities, execute an actionable
strategy, and deliver superior client
service and support. The JGS Proactive
Service Platform is driven by continuous
strategy and service delivered on a daily
basis throughout the year. The service
platform includes risk control strategies,
claims advocacy and management,
contract reviews and insurance program
design reviews.
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