Quarterly Review | Winter 2025

On January 2, 2018, the Washington Post ran an opinion piece by a Harvard professor named Joseph G. Allen with the following headline: “These toxic chemicals are everywhere—even in your body. And they won’t go away.” Allen was referring to per- and polyfluoroalkyl substances, better known as PFAS, which are synthetic compounds (that is, made by humans in laboratories) that have been in use since the 1940s. On account of their ability to withstand high temperatures and to repel oil, dirt and grease, PFAS have become ubiquitous in products such as non-stick cookware, cosmetics, food packaging, and, perhaps most consequentially, aqueous film-forming foam, or AFFF, which is used by fire-fighters in training and on the job. The bonding properties of the fluorinated carbon chain structures that comprise PFAS make them essentially non-biodegradable. Allen is credited with being the first to dub PFAS “forever chemicals,” a term that helped spark alarm about the damage they can cause when they come to live permanently in people.

There has been evidence of harm to human health resulting from exposure to PFAS, including to the liver and kidneys, decreased fertility, developmental delays, compromised immunity, and increased risk of cancer. Ingestion of PFAS is believed to present the most serious danger, and, to date, the biggest concerns about PFAS exposure have tended to focus on water contamination. Last year, DuPont and 3M, both longtime manufacturers of products containing PFAS, agreed to massive settlements—roughly $1.2 and $10.3 billion respectively—with multiple jurisdictions in the U.S. The stated purpose of the settlement was to help to rid the cities’ and towns’ water supplies of PFAS. But dramatic as they are, these settlements represent just a fraction of the legal action that has been taken regarding PFAS—over the past twenty years, the U.S. has seen more than 6,500 PFAS lawsuits, some of which have been directed against companies that sell products containing PFAS. In recent years, lawsuits have been launched against restaurant chains , cosmetic companies and tech brands, in some cases alleging an unsafe amount of PFAS in the products in question and in others claiming that a company has misleadingly described its products as environmentally friendly or healthy, when in fact they contain PFAS.

Court challenges related to PFAS have not been nearly as common in Canada, though significant precedents are starting to crop up supporting the validity of claims about the hazards of these chemicals. In Quebec, a firefighter took the province’s labour board to a tribunal that ultimately supported his argument that workplace exposure to PFAS was likely responsible, in part, for his diagnosis of testicular cancer. A judge in Ottawa certified a class-action lawsuit filed against the National Research Council of Canada for polluting local drinking water near the site of a fire research lab and thereby devaluing residents’ homes. In Newfoundland, a family has been drinking bottled water since being advised by Transport Canada last spring that their well water contains more than the amount of PFAS deemed safe by Health Canada. The family lives near St. John’s International Airport, where firefighting training, which typically involves the use of aqueous film-forming foam, has taken place. This family is leading a class-action lawsuit (which, as of early December, had yet to be certified) against the federal government. Experts think it is a matter of time before Canada sees a watershed of PFAS lawsuits similar in proportion to that in the U.S.

Will they succeed? Is there a chance that insurers will find themselves on the hook for billions of dollars in settlements on account of the damage wrought by forever chemicals? Is PFAS the new asbestos?

Canada has had legislation regulating some PFAS since 2008, when restrictions on “the use, sale, and import” of a specific type of PFAS known as PFOS—perfluorooctane sulfonate—were written into the Canadian Environmental Protection Act, 1999 (CEPA). (Certain exemptions were allowed.) This regulation was replaced in 2016 with tighter restrictions that prohibited the manufacture, use, sale, offer for sale and import of a wider swath of PFAS, and making exceptions for specific uses such as firefighting foam and photographic film. Two years later, Health Canada brought in guidelines related to PFAS and drinking water; regulating the provision of safe drinking water is a provincial responsibility, and to date, only Alberta and British Columbia have introduced PFAS regulations with respect to drinking water.

In 2022, the government proposed removing many of the exceptions allowed for in the legislation and greatly increasing restrictions on the use and production of PFAS in Canada. Then, in 2024, the federal government moved to include a much wider range of PFAS in what CEPA refers to as the “toxic substance” category and in July of last year issued notice of a requirement that businesses report on their production, importing and use of 312 different PFAS. “Companies will need to trace PFAS through their supply chains and provide detailed information, even if they were unaware of its use in certain products,” cautions posted by the Canadian brokerage firm Staebler Insurance on its website. “Failing to comply could lead to legal and financial consequences.” The deadline for reporting was January 29, 2025.

Anita Flootman Paterson, vice-president of commercial solutions at Staebler, says that while it’s not yet clear what the government will do with the information it’s collecting, regulations that “increase liability exposures for manufacturers, waste handlers, and anyone that uses PFAs products in their operations,” could be coming. Staebler is trying to help its clients comply with the new reporting requirement and also prepare for the possibility of stricter regulations in the future. “We review existing coverages with our clients to try to identify potential gaps in their policies, and then work to fill those gaps if we can,” says Flootman Paterson. “And we look at proactive risk management. We can guide clients with respect to implementing best practices for PFAS containment and disposal that would reduce their exposures, and help them to understand potential alternative products that they can use.”

Meanwhile, says Flootman Paterson, going forward, insurers will likely “need to reassess their underwriting and some of their risk assessment processes to make sure they’re taking new regulatory and litigation risks into account. They could potentially decline certain risks going forward that they may not have in the past. And they might add exclusions to avoid exposures for themselves.”

Flootman Paterson says she has noticed PFAS exclusions begin to appear in policies over the past year or so, likely in response to the proliferation of lawsuits in the U.S. In fact, PFAS has been on the radar for insurers in Canada for the past few years, and the Insurance Bureau of Canada recently released model wording for PFAS exclusions. “It was challenging wording to work on, necessitating an understanding of the unique chemical structure of PFAS,” says Elizabeth Thompson, director, Corporate Specialty Lines at Intact Insurance, who chairs the IBC liability wordings group. “Depending on where you look on the internet, in what country, the number of PFAS can range from 4,700 to 15,000.”

The discrepancy in the number of known substances that belong to the PFAS classification points to the fact that the current research is far from comprehensive, adding to the challenge of predicting the true risk of these chemicals. “We don’t have a clear picture as to what the quantum could be,” says Thompson. “PFAS is potentially in everything and anything.” She notes that articles have been published about farms in the state of Maine where it was discovered that the soil on several farms had become contaminated with PFAS from sludge, a semi-solid combination of wastewater and sewage that is often used as fertilizer on farmland. “You might be growing fruit and vegetables in that soil,” says Thompson. “Animals eat product on that farm.” Results of a Canadian Health Measures Survey released by Statistics Canada in 2019, reported that three different PFAS were found in the urine of 98.5% of Canadians tested, between the ages of 3 and 79, in amounts between 0.9 and 3 micrograms per litre. PFAS is everywhere, and there is a lot still to be understood about its potential effects. “It would be difficult to actuarially quantify the liability exposure in terms of dollar payouts given the vast and potentially unlimited exposure,” says Thompson.

In drafting model wording for PFAS exclusions, the IBC group focused on CGL coverage of products. Products are the new frontier in PFAS litigation. Lawsuits against companies that make products containing PFAS or that use PFAS in their manufacturing processes “highlight the expansive implications that come from increased public awareness around PFAS and the potential health implications,” Johanne Desloges, VP Commercial Claims at Aviva Canada, told the CIP Society in an email interview. Desloges pointed to a class-action lawsuit launched late last year against Hershey related to alleged PFAS content in several of its candy wrappers. Similar suits have been brought against Bic, for their razors, Johnson & Johnson, for their Band-Aids, and Costco’s Kirkland-brand baby wipes. Were there to be a clutch of “successful trial outcomes in the U.S. class actions,” Desloges said, “a migration north would be inevitable.”

Thompson sounds a similar cautionary note. “Unlike the U.S., we haven’t really seen a ton of products liability,” she says. “The GL pollution exclusion is for products. So the concern is that you have a product and it contains a forever chemical, and somebody can actually prove that they became ill from that product due to PFAS.” The IBC model wording for PFAS is based upon the definition of a PFAS used by the European Organization for Economic Cooperation. The OECD definition is broader than other definitions, and the IBC’s mandate is to lay out the most exclusionary option, and then its members can adapt it, if they like, so as to compete in the market.

Multiple studies have pointed to the health risks associated with exposure to PFAS. “There is broad scientific consensus that certain PFAS chemicals are harmful,” reported the New York Times in May of last year. Exposure to high levels of PFAS in drinking water has been shown to lead to cancer. In 2020, a Detroit woman who lives near a Christmas tree farm where PFAS-laden wastage was dumped by Wolverine World Wide, maker of Hush Puppies shoes, developed thyroid cancer; her husband had died of liver cancer four years earlier. In 2021, she received a settlement from Wolverine and 3M (3M licenses the Scotchguard product Wolverine used to make waterproof shoes). “Separately, nearly 2,000 local residents settled a class-action lawsuit against Wolverine,” wrote Times reporter Hiroko Tabuchi. “The region’s water source remains polluted with PFAS.”

But it remains unknown whether and to what extent claimants suing companies related to PFAS-laden products will be able to show causation. “How does one prove the target company produced the particular chemicals that are present in the plaintiff’s blood stream or caused that plaintiff’s illness/symptoms?” Desloges pointed out. “That is a significant evidentiary hurdle to be met.” For the Times piece, Tabuchi spoke with Steph Tai, associate dean at the University of Wisconsin’s Nelson Institute for Environmental Studies, who pointed out that there are many different PFAS now in circulation, and each can have “slightly different health effects.” Plus, said Tai, these health problems can take a long time to manifest.

Even if lawsuits that allege commercial products containing PFAS led to negative health outcomes prove unsuccessful, there might be a path for plaintiffs to win claims on the basis of misleading labelling. “We could see more creative approaches,” said Desloges. “Similar to greenwashing cases, we could see success with marketing claims involving products that are dubbed as safe and healthy but are found to contain PFAS.” She pointed to a class-action lawsuit launched in January 2024 against the American company Health-Ade that sells kombucha drinks. The basis of the suit was that the drinks were advertised as being “natural and organic” natural and healthy when they in fact contained PFAS. In September 2024, it was reported that the company agreed to a settlement of the lawsuit, the terms of which were not disclosed.

Thompson does not think PFAS is the next asbestos. There are some key differences, she says. For one, asbestos is the definitive culprit in asbestosis, a chronic lung disease caused by the inhalation of asbestos fibres. If a person has this illness, it was caused by asbestos. Currently, there is no known disease caused exclusively by PFAS. And while linkages between PFAS and a host of health problems have proven clear enough for plaintiffs to win lawsuits based on environmental contamination, it is not clear whether such clear causation will be possible based on exposure to products containing PFAS.

Thompson also points out that many asbestos-related lawsuits were launched on behalf of workers who were exposed to asbestos on the job. Were a similar swath of lawsuits to be launched on behalf of workers exposed to PFAS, in Canada these would largely be dealt with through workers’ compensation. To date, AFFF, the fire-fighting foam, is the PFAS product with the clearest proven link to cancer, and exposure to it tends to be through employment. The Quebec firefighter who claimed his own exposure to AFFF contributed to his diagnosis of testicular cancer was heard by a labour board.

Thompson points out that, unlike the U.S., Canada has not seen massive court settlements regarding PFAS exposure. It is in this regard that the comparison to asbestos is most fraught. The Times article from May of last year reported that a lawyer with experience in products liability who was speaking at a recent conference attended by many “plastic-industry executives” told them that PFAS litigation could “dwarf anything related to asbestos.” A source quoted in a July 2024 Carrier Management story pointed to modelling produced by Verisk, an American risk assessment firm, that found PFAS litigation could lead to losses “ranging between $120 billion and $165 billion.” Said the source, “Now, if this is true, PFAS is your new asbestos.”

What is clear is that research into PFAS and its negative health effects will continue and public awareness—both governmental and among consumers—will increase. Plus, as a society “we’re not becoming less litigious,” as Anita Flootman Paterson points out. “It’s always growing.” There is the possibility of what Johanne Desloges characterizes as “potentially explosive litigation in Canada” related to PFAS. It is incumbent on insurers and their clients to be aware of the risks involved with the use, manufacture and importing of products that contain PFAS, of the government’s new reporting requirements and any further regulations that are introduced as more information comes to light. “Canadian insurers need to stay ahead of regulatory changes that are happening and of the legal trends happening in the States,” says Flootman Paterson. “It’s important for both insurance companies and brokers to provide clarity to their clients, to try to make sure that they understand what their exposures are, especially when exclusions are put in place.” PFAS exclusions, she believes, are likely to become increasingly widespread.

Work is afoot in many industries to find alternatives to PFAS in the manufacture of their products. As Thompson notes, it can be challenging to find replacements for “all of the functionality that a PFAs brings to the table,” and this is perhaps especially true in the case of firefighting foam, for which new products are being tested but have yet to prove as effective. Some PFAS products will persist, and research is required to implement effective safety measures around their manufacture, use and disposal. The absence of a robust understanding of best practices around PFAS adds another layer of risk. As Desloges notes, “without effective remediation strategies, the costs associated with cleaning up PFAS contamination and addressing health problems could be substantial.”