They go by a fairly innocuous name: Per-And Polyfluoroalkyl Substances, or PFAS. Found in many items from food packaging to firefighting foam, PFAS chemicals have been used for decades.1 They even have a (much less innocuous) nickname—"forever chemicals”—so called because they resist breaking down and can persist in an environment for a long time. Indeed, just how long PFAS lingers in the environment is still an open question.2
PFAS manufacturers have already paid out more than $1 billion in settlements and damages stemming from related lawsuits. And more lawsuits are on the horizon.
This persistence has led to a more urgent question—are PFAS dangerous? Growing evidence suggests they may be.3
PFAS manufacturers have already paid out more than $1 billion in settlements and damages stemming from related lawsuits.4 With more suits on the horizon, it’s worth exploring whether PFAS has the makings of a significant liability event that could affect property/casualty insurers.5
A framework for examining PFAS liability
In a joint research project published last year, Verisk’s Emerging Issues and Arium teams identified several critical factors that can transform an emerging risk into a full-blown “liability event,” complete with multibillion-dollar damages and potentially steep insurer losses. These same factors could also be used to judge whether an issue is losing relevancy.
In recently published research, we’ve applied three of those factors—evident harm, cultural relevance, and substitution—to PFAS to examine its trajectory as a potentially major liability event.
Briefly, evident harm refers to a causal connection between a risk and resulting harms. Cultural relevance is determined, in part, by media and cultural attention to the issue—as public awareness spreads, the potential grows for litigation, legislation, and regulatory action. Finally, substitution refers to the danger of replacing one harmful product with another that turns out to be just as harmful, if not more so.
So how does the PFAS liability trajectory appear through this conceptual lens?
Evident harm: While research is ongoing, there are indications that link exposure to PFAS with several health risks, including those related to fertility, fetal health, immune health, and metabolic function.6
Cultural relevance: Our research found references to PFAS across a range of media—everything from podcasts to books, newspapers and digital media coverage, TV series, and at least one major motion picture. Celebrity activism has also helped raise awareness of the potential harms of PFAS.
Substitution risks: There have already been instances of what chemists refer to as “regrettable substitutions” for PFAS, where manufacturers replaced these chemicals with alternatives that they believed would be safer only to withdraw those products when health concerns arose.7
Travis Decaminada is Emerging Issues senior analyst, Underwriting Solutions at Verisk.
Lucian McMahon is research manager, Extreme Event Solutions at Verisk.
Eleanor Bragg is analyst, Extreme Event Solutions at Verisk.
David Geller, CPCU, SCLA, is manager, product and innovation, Underwriting Solutions at Verisk.
Christopher Sirota, CPCU, is the Emerging Issues product development lead, Underwriting Solutions at Verisk.