Complex casualty: coverage disputes - market insights Q3/Q4 2024

Mass tort litigation 

PFAS 

PFAS substances continue to remain under heavy regulatory scrutiny in the UK and EU: 

• A proposal submitted by Denmark, Germany, Netherlands, Norway and Sweden which seeks to ban over 10,000 PFAS chemicals remains under evaluation by the European Chemicals Agency. Although no timeframe has been set for the European Commission’s response, manufacturers may need to start preparing for the possibility of a ban and take steps to remove PFAS from their supply chains and find alternatives to minimise the disruption insofar as is possible.
• The UK’s Health and Safety Executive’s Risk Management Option Analysis report, published in April 2023, made recommendations regarding limitations on the use of PFAS in various products. It launched a public consultation on 4 April 2024 that sought to gather information and evidence relating to firefighting foams containing PFAS. The consultation closed on 24 June 2024.  

PFAS litigation continues to gain pace in Europe. In May 2024, the Veneto Regional Administrative Court ruled that the former and current owners of the chemicals producer, Miteni, were to bear the clean-up costs arising from the pollution of the river Agno and surrounding water system, which exposed over 350,000 residents to perfluorooctanoic acid. There is an ongoing criminal trial against 13 senior Miteni executives and its main shareholders.  If found guilty, they risk imprisonment and multi-million Euro fines.  

We have also identified PFAS chemicals as a key update in the Life sciences section.

Glyphosate

On 25 July 2024, the Australian Federal Court delivered its landmark ruling in McNickle v Huntsman Chemical Company Australia Pty Ltd (Initial Trial) [2024], a class action brought on behalf of over 800 plaintiffs, finding that it was not proven that the use of RoundUp (containing glyphosate) causes cancer.   

The decision, which will be welcomed by manufacturers of herbicide products, could potentially discourage similar actions being brought in the UK and EU given the substantial expert evidence involved and extensive judicial scrutiny.  

Opioids 

Arguments were held in the US Supreme Court in December 2023 over whether approval should be given for a US$6bn bankruptcy settlement involving Purdue Pharma.

On 27 June 2024, the US Supreme Court rejected the settlement with Purdue Pharma that would have shielded the Sackler family from future liability. This means that settlement talks will need to resume, and the separate Purdue Pharma bankruptcy proceedings will continue.   

We have also identified group actions as a key update in the Financial lines section.

Case developments 

Court of Appeal confirms COVID-19 FCA v Arch reasoning on concurrent causation

London International Exhibition Centre Plc v Allianz Insurance Plc & Ors [06.09.24]

On 6 September 2024, the Court of Appeal handed down its judgment, finding in favour of policyholders. The Court of Appeal agreed with the High Court that, applying the FCA v Arch & Others [2021] test case, ‘at the premises’ type clauses should respond in a similar manner to ‘radius’ clauses. In other words, losses flowing from any COVID-19 case found at the premises would satisfy the causation test to trigger cover. While this judgment is a strong precedent for policyholders seeking compensation for COVID-19 business interruption losses, they may still face evidential hurdles with respect to proving the occurrence of COVID-19 cases at the insured premises.    

Opening the floodgates for claims against water authorities?

The Manchester Ship Canal Company Ltd v United Utilities Water Ltd [02.07.

The Supreme Court confirmed that local members of the public and adjacent landowners could potentially pursue nuisance and/or trespass claims against utility companies allegedly discharging raw sewage even where there was no negligence or deliberate misconduct.   

The decision is relevant to those insurers who might wish to subrogate against water authorities for clean-up of pollution of their insured’s land /water course under an policy. However, it will be of greater impact to property damage insurers of notifications from their insured utility companies facing nuisance and/or trespass claims.