Per- and polyfluoroalkyl substances (PFAS) are a large chemical family of over 5,000 highly persistent synthetic chemicals. PFAS are chemicals that have partially or completely fluorinated carbon chains of varied lengths. Since they were discovered in the 1940s, the use of PFAS chemicals has grown significantly. They are commonly used in a wide range of consumer products from paint to food packaging, cosmetics, the clothes we wear and the products we use to launder them. The result of in-depth research now suggests that they may present significant and unquantified long-tail risks to our health and the environment. To date perfluorooctane sulfonic acid (PFOS), perfluorooctanoic acid (PFOA), and perfluorohexane sulfonic acid (PFHxS) are the most studied chemicals in the family.
PFAS chemicals are also known as ‘forever chemicals’ due to their ability to persistently remain in the environment. They can easily travel over long distances and bio accumulate. PFAS substances have been used in almost all industry branches and many consumer products for well over 50 years.
One of the primary reasons for the rise in awareness of the risks they pose is because they barely degrade in the natural environment. This is because the carbon-fluoride bond -the core of all PFAS chemicals- is resistant to thermal, chemical, and biological degradation, hence the reason for the term ‘Forever Chemicals’. PFAS materials are effective at what they do -repelling grease, water and thermal tolerance- but it’s the reported impact on the environment and the health and wellbeing of humans that is most concerning. Research to evaluate PFAS safety is time consuming and complex. After the evaluation process is complete, we then need to consider the impact of banning or restricting a PFAS chemical and ensure that the replacement product works as efficiently. A good example of this is a certain type of firefighting foam which faces being banned or restricted having been widely used to fight fires and in practice drills at many large industrial sites.
PFAS litigation and regulation: managing the consequences
The PFAS story is now unravelling. The Stockholm Convention on Persistent Organic Pollutants (POPS), is a global treaty designed to protect our health and the environment from chemicals that remain intact in the environment for long periods, are widely distributed geographically, accumulate in humans and wildlife, and have harmful impacts on human health and the environment. The Convention came into force in 2004 and was signed by 152 countries.
The POPs list specifies elimination of PFHxS (in progress and without exemption), PFOA (with specific exemptions) and restricted use of PFOS, again with specified exemptions. The EU adopted the Stockholm Convention in 2004 and subsequently introduced REACH Regulations (Registration, Evaluation, Authorization and Restriction of Chemicals) which aim is to restrict the production and import of chemicals such as PFAS into the EU by requesting substances to be registered with the European Chemicals Agency.
Research has established that PFAS may cause air contamination, pollute the ground and drinking water and affect wildlife. It is also suspected that exposure to some products can lead to serious health effects. These include kidney cancer, testicular cancer, thyroid disease, pregnancy-induced hypertension, high cholesterol, reduced response to vaccines and liver damage.
Unsurprisingly litigation has followed between companies and US States because of their use of PFAS chemicals. The first case in the US was in the early 2000s, which resulted in a multimillion-dollar settlement. Another case settled in 2018 involved a US based chemical company who settled a claim made by the state of Minnesota at US$850m for releasing PFAS related chemicals into the environment.
European and international regulation emerged concurrently and continues to do so with the US litigation. The rate of litigation in the US is alarming, and we are seeing more cases arise in Europe too. We do not know what is going to happen next following further review of PFAS chemicals. This state of flux is concerning for us, but we are working behind the scenes to understand exposures and evaluate their potential impacts.
Evaluating PFAS exposures
We know there are a wide range of industries that could potentially be impacted by the litigation such as chemical and paint manufacturers, cookware firms, fast food restaurant chains (some wrappers contain PFAS), disposal and recycling facilities, and water companies. The evaluation of a PFAS contamination can be complex, and difficult to quantify and clean-up operations can be costly and time consuming.
Currently, litigation and claims have focused on products and pollution exposures due to some PFAS substances in groundwater such as firefighting foams, as well as alleged bodily injury from contaminated drinking water. In line with similar controls in the US, the EU Drinking Water Directive, which took effect January 2021, includes a limit of 0.5 µg/l for all PFAS. This is in line with a grouping approach for all PFAS.
Managing exposures and future risks
PFAS is a major concern for the insurance industry due to the rapid emergence of litigation, regulation, and the unknown scale of the problem. Companies that use PFAS chemicals need to have robust risk management controls in place to oversee their use and exposures. We will require disclosure of potential PFAS uses as well as internal strategies and plans to mitigate any potential risk along with confirmation of what measures companies have in place to prevent any new contamination and how they are fulfilling their regulatory duties. This information is essential if we are to evaluate the risk properly and make an informed underwriting decision.
The degree of risk will depend on what PFAS chemicals are used and how. Product manufacturers and bulk users will generally have more complex matters to resolve than say a secondary, incidental user of a safer product. Risks to consumers will need to be assessed as will production processes and where they are undertaken.
Some manufacturers have voluntarily phased out the usage of some PFAS chemicals. There is an ongoing trial that is investigating the replacement of so-called ‘long-chain’ PFAS with ‘shorter-chain’ PFAS. The outcome of these trials may provide some useful insights.
There is still a long way to go before PFAS exposure evaluations are completed. Chemical research studies are a lengthy and complex process with a lot of unknowns and variables. Due to the large number of chemicals that fall under the PFAS family, it may be a long time before we fully understand their impact. Even after evaluations are complete there will be challenges with introducing safer and as effective replacements. PFAS free products are being introduced to eliminate existing aqueous film-forming foams (AFFF) containing PFAS used to extinguish fires. Until then, health and environmental exposures will need to be considered individually as part of the consultation process between underwriters, brokers and clients.
Our global casualty risk engineers have studied and tracked PFAS since it became a problem. We use our knowledge of the principles of chemical safety and current understanding of PFAS chemicals to support brokers and clients to understand and evaluate the known risks that PFAS currently present.