Figuring out the future and the now

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Forever emerging risks.

Forever chemicals = forever lawsuits = forever claims

🔬 PFAS linked to health risks

⚖️ Regulatory scrutiny increasing

💼 D&O and liability cover at risk

🌍 Exposure is everywhere

💰 Costs could be astronomical

Liability insurers have a growing emerging risk relating to the potential wave of lawsuits related to PFAS (per- and polyfluoroalkyl substances, or “forever chemicals”) which have been linked to serious health problems and are now the subject of increased regulatory scrutiny and legal action.

Recent developments, such as the US EPA’s decision to regulate PFAS in drinking water and designate two PFAS chemicals as hazardous substances, are expected to trigger a surge in litigation. Water utilities, local communities, and others may seek compensation for cleanup costs, shifting the financial burden to the polluters.

The scope of potential liability is vast, with some experts comparing the scale of PFAS litigation to that of tobacco, asbestos, and MTBE combined. Unlike those cases, however, PFAS exposure is widespread, affecting nearly every person in the US and developed markets, and quite likely in South Africa too.

But the risks extend beyond product liability. As we’ve seen with tobacco and the growing litigation risk from climate change, PFAS could also significantly impact D&O cover. Directors and officers of companies that use or produce PFAS could face claims alleging failure to disclose risks, mismanagement of PFAS-related issues, or even derivative lawsuits from shareholders arguing that their actions (or inaction) have harmed the company’s reputation, financial performance, or legal standing.

Pretty much every one of us is walking around with PFAS in our bodies. And we’re being exposed without our knowledge or consent, often by industries that knew how dangerous the chemicals were, and failed to disclose that.

Insurers should proactively assess their exposure, review policy language, and engage with policyholders to mitigate risks where possible.

While the full extent of PFAS litigation remains to be seen, it’s clear that the potential costs could be substantial.

Climate and cyber aren’t the only emerging risks.

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