Toxic tort and legacy exposures
In this chapter of our Annual Insurance Review 2023, we look at the main developments in 2022 and expected issues in 2023 for Toxic tort and legacy exposures.
Key developments in 2022
The next five to ten years will see liability insurers forced to grapple with a new wave of long tail environmental, injury and damage claims. 2022 was the year that PFAS (per-and polyfluoroalkyl) substances or "forever chemicals" emerged as a truly global legacy exposure, following two decades of litigation which has largely been concentrated in the US courts. Films such as Dark Waters previously shone a light on the pervasive use of PFAS chemicals in myriad consumer and industrial products and their presence in groundwater, soil, the air and our bloodstreams.
The majority of litigation/ attention has focused on the more widely known chemicals, PFOA and PFOS, but the recognised list of PFAS chemicals is rapidly increasing and there are thought to be several thousand chemical compounds which qualify. Their ability to withstand water and not to break down/ degrade is why they have been dubbed "forever chemicals" which cannot easily be eliminated from the environment. PFAS have been linked to various health issues, including cancers, thyroid complications, liver inflammation and weakening of the immune system.
Various lawsuits and federal multi-district litigation have been brought in the US courts against the main manufacturers of PFAS, which include DuPont, 3M and others, most notably in relation to fire-fighting foam (AFFF) and groundwater/ watercourse remediation. The litigation is ongoing but there have been some significant settlements, including a US$850m settlement between 3M and the Minnesota Attorney General.
During 2022, McDonalds and Burger King were targeted with PFAS lawsuits relating to their packaging. At the end of 2022, Coca Cola had been served with proceedings alleging the presence of PFAS in an orange juice drink and false/ misleading advertising concerning the product being free of artificial ingredients. There was also a US$5m settlement in relation to allegations that Thinx menstrual underwear contained harmful PFAS, despite being marketed as sustainable and free of toxic chemicals. Litigation against cosmetic manufacturers, firms producing school uniforms and the wider textiles industry, is also emerging.
Future PFAS litigation and regulations (particularly in the ESG-focused corporate and legal landscape) will almost certainly take on a cross-border context, however. July 2022 saw a €571m settlement for remediation between 3M Belgium and the Flemish government concerning alleged groundwater contamination in Flanders, allegedly as the result of pollutants released at 3M's Zwijndrecht manufacturing site. This settlement only relates to remediation of the area – as yet there have been no personal injury/ property damage claims. It is therefore speculated that this will pave the way for large-scale third-party claims in Europe and elsewhere, similar to those brought in the USA.
The interaction of PFAS with other pollutants such as microplastics (which derive from petroleum and contain various harmful chemicals) further exacerbates the effect of these man-made compounds on the environment. PFAS is widely being heralded as the new asbestos and given its omnipresence and many decades of use by mankind, we are merely at the beginning of litigation which will undoubtedly have significant effects on supply chains and the regulatory landscape.
Directors will need to be alive to emerging regulations on PFAS and the make-up of products/ supply chains, particularly in view of ESG reporting requirements and obligations to shareholders.
As regards plastics, we have already seen cases brought against Crystal Geyser, Coca Cola and Proctor & Gamble, which seek to hold these companies accountable for historic plastic pollution. Most recently, we have seen ClientEarth announce a "duty of vigilance" action against Danone in its capacity as a global manufacturer and supplier, in relation to its policies on plastic production and mitigating the harmful effects on the environment. Cases brought by shareholders such as Perri-v-Danimer Scientific, concerning allegedly inaccurate statements by directors regarding the biodegradability of plastic products, are likely to become more commonplace.
Litigation against chemical manufacturers continues, with ongoing lawsuits concerning paraquat (which allegedly caused Parkinson's and other diseases) and chlorpyrifos (a pesticide which allegedly causes neurological conditions in children). These are the latest in a spate of chemical cases, following the ongoing glyphosate litigation (widely used weed killer alleged to have caused various cancers) which has already seen US$10bn in settlements.
What to expect in 2023
In 2023 we can expect an uptick in both environmental/ ESG-related group claims, in particular those concerning PFAS and plastics and crucially, litigation against manufacturers/ users of these products further down the supply chain. We will also closely watch the development of talc group litigation expected to be brought against Johnson & Johnson in the English courts (which will follow multi-billion-dollar settlements in the US). Liability insurers will likely have to grapple with issues including policy trigger and historic exposure (all too familiar in the context of asbestos-related claims and occurrence-based policies) and the scope of coverage/ exclusions for pollution.
Written by Lucy Dyson.
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