TL/DR –
The United States has seen an increase in litigation related to perfluoroalkyl and polyfluoroalkyl substances (PFAS), synthetic chemicals used in a range of products but now linked to potential human health and environmental risks. A recent report by the UK’s Health and Safety Executive (HSE) has outlined recommendations to limit PFAS use, while the EU is considering a blanket ban on all PFAS chemicals, leading to expectations of increased litigation in the UK and Europe. In preparation for potential claims and liabilities, businesses are being advised to review their insurance policies, including public or commercial liability insurance, employers’ liability insurance, product liability insurance, and environmental liability insurance.
Perfluoroalkyl and polyfluoroalkyl substances (PFAS), often dubbed “forever chemicals” due to their slow degradation and longevity in the environment, have been the focus of a surge of litigation in the United States (US) recently. These synthetic chemicals are found in a variety of products, including water and stain repellents, lubricants, packaging, electronics, and fire-fighting foams. Their resistance to reacting chemically makes them popular but their potential environmental and health risks have led to high-profile lawsuits and laws restricting their use in several states.
More recently, the US Environmental Protection Agency announced legally enforceable drinking water limits for some of the most hazardous PFAS compounds. Outside the US, consumer groups and regulators are predicted to be more active, resulting in more widespread PFAS-related litigation in the United Kingdom (UK) and beyond against manufacturers, retailers, and others in the supply chain. This will require a range of responses from businesses in the UK and the European Union (EU), including a focus on how insurance policies may respond to these new and developing risks.
Recent Action by UK and EU Regulators
The UK’s Health and Safety Executive (HSE) recently detailed the extent of PFAS use in the UK and recommended limiting its use in foams, textiles, furniture, and cleaning products. The UK REACH regulations apply to the majority of chemical substances manufactured in or imported into Britain. At present, the HSE has only two PFAS restrictions in force. However, it has prioritised PFAS for evaluation under UK REACH, indicating further restrictions could likely be imposed soon.
As part of its retained EU law, the UK has banned PFHxS (perfluorohexanesulfonic acid). Further, these regulations stipulate that anyone who produces, places on the market, or uses a designated pollutant, such as PFOS (perfluorooctanoic acid) or PFOA, in contravention of the manufacture, sale, or use prohibition, will be liable to pay a fine, serve a term of imprisonment, or both.
The EU’s current PFAS legislation includes restrictions on PFOS, PFOA, and PFHxS. Further restrictions are expected after Denmark, Germany, Norway, Sweden, and the Netherlands jointly submitted the EU PFAS Restriction Proposal in 2023 aiming for a blanket ban on all PFAS chemicals. The Proposal is currently in the consultation stage, and a final decision can be expected from the European Commission in 2025.
The Spread of Litigation
PFAS-related litigations have dramatically increased in the US within the last decade. US courts have seen a growing number of consumer class action lawsuits against manufacturers that produce products containing PFAS. Such litigation is not confined to PFAS and extends to other emerging alleged contaminants.
In the UK and Europe, PFAS-related litigation is likely to increase. A recent claim in Belgium resulted in a €571 million settlement between the government and a manufacturing plant operator that contaminated surrounding land, causing high levels of PFAS in the bloodstreams of local residents. It’s only a matter of time before similar claims emerge in the UK.
Identifying Potentially Responsive Insurance Policies
Companies should be investigating their insurance policies for coverage in respect of the costs of defending PFAS-related claims and liabilities. Various policies may be relevant depending on the nature of the claim, including public liability or commercial liability insurance, employers’ liability insurance, product liability insurance, and environmental liability insurance.
Practical Tips to Enhance Coverage
Companies facing PFAS or other contaminant-related claims or potential claims should consider several steps, including prompt notification to insurers, early coverage assessment, collating and preserving relevant documents, defending claims, and negotiating policy terms.
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