Emerging risks: What is the real threat from PFAS?

The emergence of Per- and polyfluoroalkyl substances (PFAS), often called "forever chemicals," presents an evolving and multifaceted challenge for businesses, regulators and insurers alike. With a growing body of research linking specific PFAS compounds to adverse health and environmental outcomes, risk professionals must grapple with a rapidly shifting landscape of liability, regulation and risk management.

This article explores the emerging risks and trends around PFAS, focusing on actions businesses should consider taking from legal and risk perspectives to mitigate exposure and liability.

What are PFAS and why do they matter?

PFAS encompass a vast group of more than 14,000 synthetic chemicals widely used across industries for their water, grease and heat-resistant properties. Found in products ranging from firefighting foams to non-stick cookware and waterproof textiles, these chemicals have become ubiquitous. However, their persistence in the environment and human tissue has earned them the name "forever chemicals."

While a small subset of PFAS, such as perfluorooctanoic acid (PFOA) and perfluorooctane sulfonate (PFOS), has been studied extensively, the vast majority of these compounds remain under-researched. This knowledge gap makes it challenging for businesses and insurers to assess the full scope of risks associated with PFAS.

An evolving regulatory landscape

The regulatory response to PFAS varies significantly across jurisdictions. In the European Union (EU), efforts are underway to phase out the entire class of PFAS due to environmental and public health concerns. This contrasts sharply with the United States (US), where regulation remains fragmented despite a noticeable uptick in PFAS-related litigation.

In the United Kingdom, businesses should prepare for stricter regulatory scrutiny. The EU's drive to eliminate PFAS, coupled with the UK's commitment to environmental sustainability post-Brexit, suggests that similar measures may be adopted domestically. Risk managers must monitor closely legislative developments, as new standards, thresholds and bans could have far-reaching implications for operations and liability.

The growing threat of PFAS litigation

The US has seen a surge in PFAS-related lawsuits, particularly in cases involving personal injury, environmental damage and property loss. Firefighters, for example, have filed claims against chemical manufacturers, alleging health problems linked to prolonged exposure to PFAS-containing firefighting foams. The US legal system's reliance on jury trials, coupled with the phenomenon of "nuclear verdicts," has resulted in unpredictable and often substantial awards.

In the UK, litigation around PFAS is less developed but no less significant. The absence of a clear causal link between PFAS exposure and specific health outcomes complicates legal claims. Unlike asbestos, where mesothelioma provides a direct connection, PFAS-related diseases often have multiple potential causes. This evidence gap poses challenges for claimants and insurers alike.

Key risk management considerations for businesses

1. Understanding exposure: PFAS contamination is pervasive, affecting water supplies and ecosystems worldwide. Businesses across sectors—whether in manufacturing, agriculture or waste management—must assess their exposure to PFAS-related risks. This requires a comprehensive review of operations, supply chains and product lifecycles.
2. Establishing causation: Proving causation in PFAS cases is notoriously difficult. Businesses must document and monitor their use of PFAS-containing substances to mitigate potential liability. In cases of direct contamination, such as spills or manufacturing emissions, risk of litigation is higher.
3. Supply chain transparency: Given the complexity of global supply chains, businesses may inadvertently source materials containing PFAS. Collaborating with suppliers to identify and eliminate these substances is crucial for reducing exposure.
4. Insurance coverage: The insurance industry is increasingly scrutinising PFAS risks, with some carriers opting to exclude PFAS-related liabilities from policies. Businesses should work closely with their insurer to ensure tailored coverage that addresses their specific risk profile.

The role of insurers

Insurers face significant challenges in underwriting PFAS-related risks. The scientific uncertainty, coupled with the broad footprint of PFAS across industries, complicates risk assessment and claims management. While some insurers have adopted blanket exclusions for PFAS, this approach is not sustainable.

Instead, insurers must adopt a nuanced, technical approach to underwriting. This includes leveraging risk engineering expertise to assess sector-specific exposures and collaborating with clients to develop bespoke exclusions that reflect the intent of coverage. As the regulatory and litigation landscape evolves, insurers should remain agile, adapting their products and services to meet emerging needs.

Lessons from asbestos

The PFAS issue bears striking similarities to the asbestos epidemic which triggered a global health crisis in the late 20th century. Both involve widespread use of hazardous materials, delayed recognition of health risks and complex causation issues. However, key differences—such as the absence of a "signature" disease like mesothelioma—make PFAS litigation uniquely challenging.

For businesses, the lessons of asbestos are clear: proactive risk management is essential. This includes maintaining detailed records of past and present operations, as historical policies may provide coverage for PFAS-related claims.

Opportunities for innovation

Despite the challenges, the PFAS crisis also presents opportunities for innovation. Insurers could consider developing named-peril products that address specific PFAS compounds, enabling businesses to secure targeted coverage. Similarly, advancements in scientific research may lead to the development of safer alternatives to PFAS, reducing reliance on these harmful chemicals.

For businesses, investing in sustainable practices and technologies can enhance resilience and reputation. By reducing their PFAS footprint, companies can position themselves as leaders in environmental stewardship.

A call to action for UK risk managers

As the scientific and regulatory landscape around PFAS continues to evolve, UK risk managers must take a proactive stance. Key actions include:

• Stay informed: Regularly monitor scientific research and regulatory developments to anticipate changes that may impact operations.
• Engage stakeholders: Collaborate with insurers, legal advisors and supply chain partners to develop a comprehensive risk management strategy.
• Invest in sustainability: Adopt practices that minimise PFAS use and promote environmental sustainability.

By taking these steps, businesses can navigate the complex landscape of PFAS, protecting their operations, stakeholders and reputations.

Conclusion

PFAS represents a "developing risk" rather than a truly "emerging" one, as awareness of these chemicals and their impacts continues to grow. For risk managers, the challenge lies in balancing regulatory compliance, operational needs and liability mitigation. While the road ahead is fraught with uncertainty, the time to act is now. By understanding the risks, engaging with stakeholders and embracing innovation, businesses can turn the PFAS challenge into an opportunity for growth and resilience.

Disclaimer: This article is for informational purposes only and does not constitute legal, scientific, or insurance advice. Readers are encouraged to consult with appropriate professionals for specific guidance.