It's been more than two and a half years since my article “Emerging Risks With Long Tails” appeared in Insurance Thought Leadership. It was written in December 2021 to heighten the risk management and insurance communities’ attention on and preparedness for the lawsuits and claims that will emerge from climate and forever chemical risks. A second look, specifically at forever chemicals known as PFAS, which includes chemicals such as PFOS and PFOA, is timely.
Already, some very significant cases have gone to settlement. For example, in July, BASF paid about $4 million as part of a settlement, to be followed by another payment on March 1, 2025, of $312.5 million. The settlement will cover claims related to PFAS detected in drinking water. In its own media release, BASF states that it has a significant amount of insurance from a number of insurers, and it will seek recovery of its settlement from them.
Another example involves 3M. This past April, a federal judge approved a settlement between 3M and public water suppliers valued at more than $10 billion. In fact, the final cost of the settlement could range between $10.5 billion and $12.5 billion, depending on additional identified contamination, with payouts through 2036.
Also tied to drinking water contamination is the DuPont (and spinoffs Chemours and Corteva) settlement of $1.18 billion to resolve PFAS complaints by roughly 300 drinking water providers.
It is not just companies that produce and sell PFAS ingredients put into drinking water that have seen such activity. A host of other types of suits have arisen, including a 2024 class action in U.S. District Court of New Jersey against Johnson & Johnson (and its spinoff Kenvue) contending that its bandages contain PFAS ingredients, and lawsuits against McDonald's and Burger King in 2022 alleging PFAS is in their food packaging. The outcomes could show both the potential proliferation and determination of future suits.
One suit that did result in the defendant, Recreational Equipment Inc. (REI), defeating the proposed class action rested on a rather weak set of facts brought by the originating plaintiff. The plaintiff had alleged the company deceptively marketed its waterproof clothing as safe and sustainable even though such clothing allegedly contained PFAS. There is much discussion about other makers of waterproof and rain-protective apparel being sued over the presence of PFAS in their clothing.
This is a small sampling of PFAS litigation currently. The number and types of products that could be in scope for future litigation are boundless. It could be in clothing, food or drink containers, cooking pots, pans or utensils, furniture, building materials and so on. Additionally, the litigation might not only involve the makers of the chemicals themselves and the manufacturers that use these chemicals in their products, but also retailers of products with PFAS or owners of venues where the building materials or furnishings have PFAS in them.
For risk managers, this means that PFAS risk needs an in-depth review. Any possible association with PFAS should be identified, tested, quantified and mitigated. Mitigation can be both retrospective and prospective. Retrospective-oriented mitigation might involve removing some produced but unsold items from inventories, beneficial disclosures, comprehensive cataloging of all occurrence-based insurance policies or additions to captive reserves. Prospective-type mitigation might include elimination of PFAS in all parts of the value chain, special testing of materials where PFAS is not supposed to be present but there is a possibility it may be present and staff training about PFAS and company policy concerning it.
The amount of PFAS in and around all of us is significant and may be the cause of the rise in some of the illnesses we are afflicted with. The business community is seeing only the tip of the iceberg when it comes to litigation and consequent claims activity. ERM practitioners need to put serious focus on this issue and invest in sound mitigation strategies and actions.
