Advisen Front Page News
- Tuesday, October 18, 2022
Plastic pollution could trigger 'colossal liability claims:' study
Advisen
Plastic pollution could trigger 'colossal liability claims:' study
By Alex Zank, Advisen
Litigation stemming from claims of plastic pollution could produce corporate liabilities ranging from $20 billion to $100 billion in the U.S. alone, according to a new report from philanthropic group Minderoo Foundation.
Minderoo Foundation studied the effects of plastic pollution, detailed in a report entitled “The Price of Plastic Pollution,” with legal firm Clyde & Co. and liability risk consultancy Praedicat. Researchers examined data on environmental and health impacts that “could trigger potentially colossal liability claims against the petrochemical industry.”
“The plastics issue is something that we’ve been referring to as the next climate since it is an enormously widespread and systemic environmental and health risk. It may, in fact, have more potential for insurance losses because of the way in which it’s driving direct bodily injury,” Bob Reville, CEO of Praedicat, said in a statement. “At the same time as the insurance industry incorporates the science around plastic risks into its underwriting, it can help corporations mitigate the potential for loss, both for the companies and the environment.”
Between now and 2030, researchers said they expect claims relating to human exposures to chemical additives to arise against manufacturers, similar to litigation over climate change, PFAS, and glyphosate.
Other anticipated claims include those for environmental damage, human exposures to micro and nanoplastics (MNP), property damage, and “greenwashing” – misleading behaviors related to sustainability claims. Impacted insurance lines could include employers’ liability, general liability, property, environmental liability, and directors and officers (D&O) liability.
Future exposures (beyond 2030) may increase by “an order of magnitude” due to advances in science and evolving legal doctrines and standards. Many of the industries that could face litigation for the manufacture, use, or disposal of plastics have not experienced such claims in the past activities and it’s unlikely their insurers priced for these risks, according to the report.
“The higher cost outcomes of future plastic-related litigation could present a potential solvency issue for insurers if preventative action is not taken,” researchers stated.
Insurers play a role in reducing harm from plastic pollution, the researchers wrote. Once they fully understand potential exposure in their portfolios, carriers can, among other things, engage industry clients on mitigating exposure, create incentives to drive the desired changes in behavior, and support stricter standards covering circular material management practices.
Researchers advised insurance regulators to develop an independent view of potential liability exposure at the individual and insurance industry level, and model the risk of disruption of possible large-scale losses resulting from plastic pollution. They likened it to regulatory responses to climate risk.
“We need to understand what we’re dealing with so that industry and insurers alike can set aside the resources required to deal with the consequences,” said Geoff Summerhayes, former executive board member of the Australian Prudential Regulation Authority and former chair of UNEP’s Sustainable Insurance Forum.
The American Chemistry Council, a chemical industry trade association, called the report “detached from reality.”
“Every day plastics help protect people and keep us healthy in countless ways,” Joshua Baca, ACC vice president of plastics, said in a statement. He noted that medical equipment like IV bags and N95 masks, food packaging, home insulation, and other products rely upon plastics.
