Teflon, nanotechnology, welding fumes: environmental risks abound

Anticipating and assessing risk, along with defining and assigning value to units of exposure are basic components of an insurance underwriter’s job. Challenging as such tasks are when examining well-known exposures, they become doubly daunting when faced with previously unknown or little considered environmental risks that have the potential to trigger extensive litigation and expensive claims.

Exposures such as C-8, nanotechnology and welding rod fumes may not be at the top of many insurance professionals’ lists of possible generators of thousands of claims and millions of dollars in insurance payouts, but according to a panel of experts participating in a discussion titled “Emerging Risks: Are We Ready,” those are some of the risks that insurers and their underwriters should be looking at with a careful eye.

Participants in the panel, which was held in conjunction with Dallas All Industry Day 2005, a joint venture between the Independent Insurance Agents of Dallas, the Dallas Chapter of CPCU and University of North Texas, included: Greg Berg, vice president, Middle Market – The Hartford Insurance Group; Daniel P. Sloan, managing director, Risk Management Division – USI of Texas; Charlie Kingdollar, vice president – General Reinsurance Corporation; Jim Redwine, senior vice president – Shaw Environmental Liability Solutions LLC; and Dan Torpey, partner and practice leader, Insurance Claims Services – Ernst & Young. The panel was moderated by Robin K. Olson of IRMI.

Teflon’s C-8
Ammonium perfluorooctanoate (PFOA), or C-8 as it is commonly called, is defined on the DuPont Washington Works Web site on C-8 as a “surfactant, or detergent-like material, used by DuPont and other companies as an essential processing aid in the manufacture of fluoropolymer resins and finishes.” Among other things it is used in making coatings for non-stick cookware, such as Teflon. It is an ingredient in some types of food packaging, and fluoropolymer finishes are used in the manufacturing of many other industrial and consumer products.

According to DuPont, “C-8 is removed as the fluoropolymer resins and finishes are processed into finished products for industrial and consumer use. Some products may contain trace or non-detectable amounts of C-8. DuPont has not detected C-8 in consumer products, such as non-stick cookware, sold under the Teflon brand.”

The 3M Company was the sole U.S. manufacturer of C-8, but in 2000 the company announced it would discontinue production of the substance in the U.S.

DuPont maintains that while C-8 tends to remain “in the body or environment for extended periods of time after exposure, there is no evidence of adverse human health impact.”

However, studies conducted by the Environmental Protection Agency have found that PFOA causes “developmental toxicity and other effects in laboratory animals.”

C-8 has been used in manufacturing for some 45 years, according to Charlie Kindollar, but the discovery of the substance in ground water outside of DuPont’s West Virginia factory prompted government investigations into whether exposure to C-8 is a health threat. Those investigations are ongoing.

“There are over 1,000 firms in the U.S. that make products that use or contain C-8,” Kingdollar said. He noted that a product called Zonal, which is commonly used in food packaging, “breaks down into C-8 and leaches into the food it’s packaging. … There are many Americans that have elevated levels of Zonal in their blood system.”

Kingdollar said while no proof has yet been found of an association between C-8 and liver or reproductive toxicity, or cancer, class action litigation has been filed in eight states seeking funds to medically monitor the substance and its effects. In addition, an EPA science advisory committee recently recommended that C-8 be named a likely carcinogen.

Plaintiffs in other lawsuits seek “compensation to “buy all new pots and pans,” Kingdollar said. “That doesn’t sound like a lot of money … but Dupont has sold $45 billion in Teflon-coated cookware.”

According to Jim Redwine, C-8 is a prime example of why the insurance industry needs to think about how it deals with emerging risks.

“This is just a staggering potential exposure,” Redwine said. “What I’ve seen suggests that something [like] 96 percent of people have C-8 in our blood. … Not only is [it] associated with liver and pancreatic cancer, it’s also associated with elevated cholesterol, triglycerides and heart disease.”

Welding rod fumes
There are some 70,000 current and former welders in the U.S. With studies indicating that manganese fumes released by the welding process can cause manganese poisoning, Parkinson’s or Parkinson’s-like illnesses, and litigation already filed on behalf of around 10,000 plaintiffs, the potential impact on the insurance industry of welding rod claims could also be called “staggering.”

“There are over 100 companies named as defendants in the ongoing litigation,” Kingdollar said. He added that although “there are still issues of causation” the first cases to be tried have not fared well for the insurance industry. A case in Illinois resulted in a $1 million verdict and in Ohio, a lawsuit settled for $2 million before a verdict was returned.

“One major investment bank did a study of this issue and found that if 70,000 claimants came down with this illness, the liability would be between $35 billion and $70 billion to the insurance industry,” Kingdollar said. “To make matters worse it’s not just the 70,000 current and former welders that could become ill. We’ve already seen suits filed against premises owners over second hand exposure. … So there could be more than 70,000 claimants.”

In addition, wholesalers, distributors and retailers, as well as protective equipment manufactures and their wholesalers, retailers and distributors have all been named as defendants in welding rod-related litigation, he said.

Nanotechnology exposure
According to the National Nanotechnology Initiative (www.nano.gov), nanotechnology is “the understanding and control of matter at dimensions of roughly 1 to 100 nanometers, where unique phenomena enable novel applications. Encompassing nanoscale science, engineering and technology, nanotechnology involves imaging, measuring, modeling, and manipulating matter at this length scale.”

Basically, “nanotechnology is the ability to manipulate substances down at the molecular level,” Kingdollar said.

A nanometer is one billionth of a meter; Kingdollar described it as “what you’d end up with if you divided the human hair 80,000 times.” Or as NNI put it, “a sheet of paper is about 100,000 nanometers thick.”

Nanotechnology research today is conducted on two different tracks, Kingdollar said. “One is bringing existing substances–gold, copper, iron, whatever it is down to nano sizes. … Another one is creating entirely new things that never existed, like taking molecules from [various substances], putting them together and saying, okay, what have we got?”

Used extensively in medical research, the technology in some sectors is well developed and in other sectors it’s in an early stage, said The Hartford’s Greg Berg. “So with respect to the ability to identify what exposures these new technologies may create it is problematic,” he added.

Berg said it is difficult to define a unit of exposure with respect to nanotechnology. In the area of products liability, underwriters often use sales as one way to assess exposure. However, “in these nanotechnology areas I’m not sure sales means much,” Berg explained. “How do we count units of exposure with respect to these substances and once we identify a unit of exposure, how do we quantify how often over what period of time that unit of exposure will cause harm? … And if it does, what’s the expected severity? … Insurability is going to be an issue to the extent that the industry starts to consciously view it as a risk exposure and then starts to make some judgments about insurability.”

Next industrial revolution
Kingdollar suggested that the federal government views nanotechnology as the “next industrial revolution.” There are some 1,700 companies globally producing nanoproducts, he said. Half of those companies are in the U.S. There are more than two million workers that are regularly exposed to nanomaterials, he maintained.

While impact on workers and consumers of products that contain nanomaterials is uncertain, the EPA has been directing research for about five years into the potential human health and environmental implications of nanotechnology. According to an EPA draft whitepaper on nanotechnology, “potential human exposures to nanomaterials, or mixtures of nanomaterials, include workers exposed during the production and use of nanomaterials, general population exposure from releases to the environment during the production or use in the workplace, and direct general population exposure during the use of commercially available products containing nanomaterials.”

Early laboratory studies on mice have indicated blood clotting, lung damage, brain damage and even death by suffocation, Kingdollar said.

The approximately 130 nanoproducts currently manufactured are ingredients in a wide variety of other products, including cosmetics and sunscreen. It has been suggested that by 2010 there will be around 500 nanoproducts being manufactured.