How Insurers Can Think About PFAS Liability Modeling

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By Emerging Issues Team  

Per- and polyfluoroalkyl substances (PFAS), also known as “forever chemicals,” are a group of chemicals that have generated significant concerns related to their potential impacts on human health and the environment. PFAS concerns have already led to a considerable liability event, with over $1 billion in settlements to date.1 Major PFAS manufacturers have also set aside $4 billion to handle future claims, and some legal analysts expect litigation to grow and expand further.2

How might PFAS continue to develop as a liability risk? In this article, we’ll discuss some considerations involved in modeling potential future PFAS liability accumulations as part of Verisk’s Arium product, which provides liability accumulation modeling to (re)insurers and brokers.

The current state of PFAS litigation
First, let’s consider some of the major features of past and current litigation. Thousands of claims have been filed. Two of the most common types of claims, according to our analysis, include:

1. Claims filed by town residents alleging health risks, bodily injuries (including kidney cancer, testicular cancer, ulcerative colitis, thyroid disease, and several other disease types)3, and property damage4 from drinking water contaminated by PFAS leaked or discharged from nearby landfills, manufacturing facilities, or sites with significant firefighting foam contamination, such as military bases. In addition, several state governments and dozens of public and private water utilities have sued seeking remediation and monetary compensation for PFAS-contaminated water.5

2. Claims filed by firefighters alleging health risks or bodily injury from significant exposure to PFAS-containing protective gear or firefighting foam.6

The defendants often targeted are PFAS chemical manufacturers and producers of AFFF (aqueous film-forming foam, a fire suppressant) and fire protective gear.7 Several companies that manufacture other PFAS-containing products have also been named in water contamination allegations, including shoe, paper, carpet, and textile manufacturers.8

There have also been several consumer lawsuits against manufacturers and retailers alleging that they misled consumers about certain products that contain PFAS, but these lawsuits do not allege personal injuries from PFAS exposure in those products.9

Growing concerns
However, PFAS exposure has the potential to grow into an even more significant, widely systemic liability event.

Consider, for instance, PFAS chemical properties:

Ubiquity: There are thousands of types of PFAS in use worldwide, with estimates ranging between 4,000 and 7,000.10 Dozens of industries manufacture PFAS compounds or use them in product manufacturing and industrial processes, and hundreds of consumer products contain PFAS, including certain cosmetics, nonstick cookware, textiles, cleaning products, and food products packaged in PFAS-embedded materials.11 According to the NIEHS, PFAS chemicals have been found in the blood of 97 percent of Americans.12

Persistence: Some companies have discontinued the use of certain PFAS in the U.S. However, these “forever chemicals” are very difficult to degrade and can persist in the environment for long periods of time.13

Bioaccumulation: Persistence can lead to increasing accumulation of PFAS chemicals in the human body, which has raised concerns about long-term risk from even low levels of PFAS exposure.14

These factors tend to suggest that there may be many more potential plaintiffs who might allege harms from PFAS exposure and contamination in the future. Additionally, scientific research into those harms is still ongoing.15 Studies to date have been limited to only certain types of PFAS, and exposures and toxicity levels may differ across the many thousands of compounds.16 Furthermore, as we discussed in a joint article between Verisk’s Emerging Issues and Arium teams, increasing public, regulatory, and political attention on PFAS may spur further litigation even while the evidence of harms to human health remains uncertain.


Modeling considerations
Insurers concerned about PFAS liability have a number of variables to consider when modeling this exposure. Arium considers several parameters to model the potential future liability impacts of PFAS, including: The potential plaintiffs, the severity of potential losses, and the insureds that might bear these losses.

Exposure pathways and harmed populations
More PFAS water contamination could be detected, especially given regulatory changes such as the EPA’s nationwide drinking water monitoring requirements introduced in late 2021.17 More contaminated sites could spur more claims.

Beyond firefighting, certain manufacturing occupations may also expose workers to elevated PFAS levels.18

Product exposure through the hundreds of PFAS-containing consumer products may become a greater concern. Some litigation to date has focused on product marketing, and current research indicates that PFAS exposure in consumer products is typically low.19 Nonetheless, certain populations, such as children, may be at higher risk from PFAS in certain products20, and the size of the potentially harmed population alone could generate significant losses, even if excess risks from PFAS product exposures are comparatively low.

Types of harms
Scientific research could identify new associations between PFAS exposure and certain health impacts, which could expand the harms and associated costs claimed in litigation. Newer types of PFAS may also prove equally or more harmful than legacy PFAS compounds.

Insureds
Litigation may begin to implicate many more non-chemical manufacturers, from either the industries already targeted or the hundreds of other industries that use PFAS, if their operations are alleged to lead to PFAS runoff and contamination, harm to their workers, and/or harm to consumers of their products.

These are just some of the considerations Arium’s models take into account to provide (re)insurers and brokers with potential outcomes of increasing PFAS litigation.

Contributors

Eleanor Bragg is a research analyst in the casualty analytics group at Verisk.

Lucian McMahon is a principal analyst, senior manager in the casualty analytics group at Verisk.

References
  1. https://www.natlawreview.com/article/pfas-product-liability-cases-are-floodgates-now-open
  2. https://www.natlawreview.com/article/4-billion-pfas-settlement-why-downstream-commerce-companies-should-be-waryhttps://www.dechert.com/knowledge/onpoint/2021/4/pfas--expected-litigation-trends.htmlhttps://www.insurancejournal.com/news/national/2021/11/16/642332.htm
  3. https://casetext.com/case/in-re-e-i-du-pont-de-nemours-co-1https://www.law360.com/articles/1369748/dupont-entity-s-50m-cancer-trial-loss-gets-cut-to-40mhttps://www.bloomberglaw.com/public/desktop/document/DorisBanksvEIDuPontDENemoursandCoDocketNoS19C05024DelSuperCtMay17?1647025868
  4. https://www.natlawreview.com/article/pfas-happy-mistake-to-ubiquity-to-toxic-liability-there-coverage
  5. https://slenvironment.com/newsroom/news/sl-environmental-represents-over-40-water-providers-in-pfas-multidistrict-litigation-mdl-suit/https://www.natlawreview.com/article/pfas-water-utility-lawsuit-shows-increasing-trendhttps://www.ncsl.org/research/environment-and-natural-resources/state-and-federal-efforts-to-address-pfas-contamination.aspx#:~:text=For%20example%2C%20Michigan%2C%20Minnesota%2C,at%20U.S.%20Air%20Force%20bases., https://law.alaska.gov/press/releases/2021/040721-PFAS.htmlhttps://ncdoj.gov/attorney-general-josh-stein-takes-legal-action-against-dupont-over-pfas-pollution/https://news.delaware.gov/2021/07/13/state-resolves-natural-resource-damage-claims/
  6. https://boston.cbslocal.com/wp-content/uploads/sites/3859903/2022/02/document7.pdfhttps://www.jpml.uscourts.gov/sites/jpml/files/MDL-2873-Tag-Along-Transfer-01-21.pdfhttps://news.bloomberglaw.com/environment-and-energy/firefighters-file-multiple-lawsuits-over-pfas-in-gear-foam
  7. https://www.natlawreview.com/article/pfas-product-liability-cases-are-floodgates-now-openhttps://www.law360.com/articles/1109934/3m-fire-suppressant-mdl-will-be-heard-in-south-carolina
  8. https://www.govinfo.gov/content/pkg/USCOURTS-miwd-1_17-cv-01062/pdf/USCOURTS-miwd-1_17-cv-01062-0.pdfhttps://www.natlawreview.com/article/pfas-georgia-rulings-open-door-to-downstream-liabilities , https://www.hannonlaw.com/wp-content/uploads/2017/09/Complaint-PD.pdf
  9. https://www.natlawreview.com/article/cosmetics-and-pfas-industry-lawsuits-lesson-esg
  10. https://www.gtlaw.com/en/insights/2020/3/pfas-update-epa-begins-process-of-developing-drinking-water-limits-for-pfos-and-pfoahttps://portal.ct.gov/DEEP/Remediation--Site-Clean-Up/Contaminants-of-Emerging-Concern/Per--and-Polyfluoroalkyl-Substances
  11. https://www.niehs.nih.gov/health/materials/perfluoroalkyl_and_polyfluoroalkyl_substances_508.pdf
  12. https://www.niehs.nih.gov/health/topics/agents/pfc/
  13. https://www.epa.gov/pfas/pfas-explained
  14. https://journals.plos.org/plosbiology/article?id=10.1371/journal.pbio.2002855
  15. https://www.epa.gov/pfas/our-current-understanding-human-health-and-environmental-risks-pfas
  16. Ibid
  17. https://www.epa.gov/newsreleases/epa-announces-nationwide-monitoring-effort-better-understand-extent-pfas-drinking
  18. https://www.cdc.gov/niosh/topics/pfas/default.html
  19. https://www.atsdr.cdc.gov/pfas/health-effects/exposure.html
  20. https://www.epa.gov/pfas/our-current-understanding-human-health-and-environmental-risks-pfas
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