Per- and polyfluoroalkyl substances (PFAS) have emerged as a significant concern due to their widespread use in consumer goods, leading to exposure to potential health and environmental hazards. The rise in PFAS-related challenges has prompted interest in comprehending their influence on insurance and claims. This article takes a closer look at PFAS regulation in the United States, discusses PFAS-related insurance matters and claims, and highlights emerging trends. We also provide strategic guidance for businesses to manage risks associated with PFAS.
PFAS and Judicial Proceedings
Like Asbestos, PFAS contamination can have grave consequences on businesses resulting in a rise in liability claims, particularly for companies and industries involved in the manufacture or use of PFAS-containing products. Entities may face substantial cleanup costs and legal actions from affected communities or individuals. PFAS contamination can also cause property values to decline, leading to insurance claims related to property damage. In addition, individuals exposed to PFAS substances may suffer severe health issues, such as cancer, leading to personal injury claims against companies responsible for PFAS exposure. Legal cases like 3M vs The State of Minnesota and Michigan vs Wolverine Worldwide, Inc highlight the complexities of these risks and the potential of large, health-related claims linked to PFAS.
Emerging Patterns in PFAS Insurance and Claims
Many insurance policies now exclude or limit coverage for PFAS-related liabilities due to the high costs and potential environmental contamination related to such claims. This is particularly common in the food manufacturing industry. Insurance companies may also raise premiums for businesses operating in sectors vulnerable to PFAS liabilities as the number of claims related to PFAS grows.
Mitigating Risks Associated with PFAS
Businesses can take proactive measures to mitigate the risks associated with PFAS, such as conducting comprehensive risk evaluations to identify potential PFAS exposures and taking preemptive measures to mitigate risks. Insureds must proactively demonstrate PFAS understanding, compliance with local laws, and a plan to mitigate this risk for best results in constructing a robust insurance program. Some strategies include using safer alternatives to products containing PFAS to help reduce risks and setting timelines to phase out PFAS exposure. Additionally, insureds may consider various pollution and environmental liability policies to mitigate these exposures. This type of insurance can protect businesses from significant financial pressures in the event of contamination. Businesses must remain informed about the evolving PFAS regulations and compliance requirements to help reduce the potential for legal liabilities.
Evolving State-Level PFAS Regulations: In recent years, many individual states in the United States have taken proactive measures to address PFAS contamination. States like Michigan, New Jersey, and California have implemented stringent regulations regarding PFAS in drinking water, air emissions, and industrial discharges. These state-level regulations often have varying standards and requirements, adding complexity for businesses operating in multiple states. Compliance with these evolving state regulations is becoming a crucial aspect of PFAS risk management for businesses. It’s important for insurance professionals and businesses to stay updated on these state-specific regulations to ensure compliance and mitigate potential liabilities.
Final Thoughts
Regulation of PFAS in the United States is evolving rapidly, and risks associated with PFAS continue to influence the insurance landscape. The range of challenges posed by PFAS, from contamination liabilities to health claims, creates complex situations for businesses and insurance companies. Through comprehensive risk assessments, environmental liability insurance, and compliance diligence, businesses can navigate the intricacies of PFAS regulation while promoting safer and more sustainable practices. At DSP Insurance Services, we believe that increasing awareness and preparedness is the only way to confront the challenges associated with PFAS regulation effectively. If you are concerned about how PFAS regulation may impact your business or would simply like more information on best-in-class risk management, please contact our team of experts at DSP Insurance.
