North America could be facing a PFAS (also known as ‘forever chemicals’) crisis with lawsuits having been brought arguing that exposure to these chemicals has caused severe health problems.
PFAS chemicals have historically been used in manufacturing to create various items, including non-stick pans, waterproof mascara and the lining of microwave popcorn bags, just to name a few. There are more that 9,000 different varieties of PFAS, including PFOS (Perfluorooctanesulfonic acid).
“It is even present in our water because of how hard it is to break down,” said Johanne Desloges, Aviva VP of GCS claims, who sat down with Insurance Business to discuss PFAS trends.
In Canada, PFAS litigation has remained the province of employee litigation, including a firefighter who was able to link his testicular cancer to exposure on the job.
“The foam that is used to extinguish fires is made with PFOS, which created a direct correlation to how he would have come in contact with the chemical,” Desloges said.
A growing number of consumer-based lawsuits filed against companies that use the chemical in the United States is causing concern across the border. This could have ramifications for Canadian businesses, as nuclear verdicts from the American judicial system can have an impact on rates and underwriting appetite in Canada.
“While America certainly has manufacturing-related lawsuits — back in 2021, 3M was sued on average about three times a day — we’re starting to see ancillary action further down the supply chain,” she said.
Burger King and McDonald’s both have class action lawsuits initiated against them because of the companies’ take-out containers featuring PFOS.
“It is alleged that their Whopper and Big Mac containers feature an unhealthy amount of PFAS,” Desloges said.
There has also been some legal action taken against L’Oreal alleging that the cosmetics company does not disclose that its mascara and other products contain PFAS.
If an insured has a policy that does not include PFAS, they will have to bear the brunt of the verdict, which, depending on the outcome, could prove catastrophic.
Compared to Europe, Canada is very far behind in terms of PFAS regulation, according to Desloges.
“There are a couple of European countries that are looking to outright ban PFAS use in manufacturing by 2050 at the latest,” she said.
“Canada is nowhere near there.”
According to law firm McMillan, PFAS regulation is in its inception and currently exists at a federal level, as well as in a limited way in both British Columbia and Ontario.
“There is information around how much PFAS is in our water and what are appropriate levels to have,” Desloges said.
The challenge is that these are federal guidelines. It is the provinces and municipalities that are responsible for implementing these rules and managing the water supply.
“There are levels of PFAS that different jurisdictions will say are acceptable,” Desloges said. “It depends on the area; some may want to completely abolish all use of PFAS, while others may find that a small amount is acceptable.”
When looking at potential PFAS exposure and claims, Desloges recommended that companies gain better understanding of their products within the supply chain network, and have great oversight over the end-to-end process.
“The challenge is that finding alternatives to PFAS is going to be very expensive,” she said. “It’s really [about] understanding your current practices to remove or mitigate the amount of effects that you might have in your processes and products.”
For companies that offer a kitchen in their offices for employees to use, it is crucial to limit PFAS exposure in any way possible.
“Brita filters are quite good at filtering out PFAS, so having that is an easy solution in mitigation,” Desloges said.
Other areas of concern include directors and officers and their role in mitigating PFAS contamination.
“You could see some liability on them for pollution cleanup if the company is no longer able to meet their regulatory obligations because of insolvency or bankruptcy,” Desloges said.
“Depending on what is federally regulated, that’ll have implications for your directors and officers. And it’ll have implications as well for insurers when they come to defend customers.”
Desloges stressed that insureds must have a good understanding of their policy to see if there is any exclusion to exposures to PFAS or other environmental contaminants, depending on how it is defined.
“It’s really important that we’re transparent about the potential risks and the liabilities around it, so that we can help customers through that,” she said.
