Emerging Risks Report Q1 ’18

There are many risks that can impact an organization not just monetarily but intangible impacts such as loss of productivity, damage to reputation, employee turnover, etc. Below is a summary list of emerging risks that XL suggests as top risks in the first quarter of 2018.

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Sexual Harassment Claims

  • Recent media attention around high profile sexual harassment incidents in entertainment, news outlets and politics, as well as the social media hashtag #metoo has increased public awareness.
  • Generally, insurance coverage for hostile work environment, harassment and sexual harassment claims can be sought via Employment Practices Liability. So while this is not an emerging issue per se, it is expected that there could be an increase in these claims as more people come forward in light of the recent press and media activity.
  • It is also likely that more companies will prioritize the purchase of this coverage if they have not done so in the past.
  • Beyond EPL, sexual harassment claims – especially at an executive level – may also impact D&O business in one of two ways:
    • A director directly named in a D&O lawsuit, and where there is no sexual harassment exclusion.
    • If a director is found to have behaved negligently, and / or management were alleged to have been complicit in covering up any sexual harassment activity. The resulting loss could lead to a shareholders derivatives lawsuit or a securities class action in the event of a share price drop.
  • To date, there have been a few notable derivative suits against directors and officers for their alleged failure to prevent a hostile work environment. This will be an area to continue to watch.
  • In the case of liability, sexual harassment claims are generally excluded from general liability forms. Third party coverage for EPL policies can be added by endorsement.


  • Glyphosate is the main chemical in the world’s most widely used weed killer, across agriculture, forestry, urban and home applications. In the US, chemical manufacturers of glyphosate face numerous lawsuits from farmers and individuals claiming they did not provide adequate warnings of the dangers of glyphosate, leading to “severe” physical problems including cancer.
  • In December 2017, the US Environmental Protection Agency (EPA) released its human health risk assessment concluding that glyphosate is “not likely to be carcinogenic to humans.”
  • The European Food Safety Authority (EFSA) had also similarly maintained that the substance would not ‘…pose a carcinogenic threat to humans’ in 2015. Furthermore, EU member states voted in November 2017 in favor of renewing their approval for glyphosate use in the region over the next five years.
  • In 2015 the International Agency for Research on Cancer, an arm of the World Health Organization (WHO), released a report concluding that glyphosate was ‘probable carcinogen’, conflicting with assessments by other agencies having evaluated the chemical.
  • These events are significant as they show that there remains a split opinion between chemical manufacturers, regulators and environmental groups on glyphosate’s health effects.
  • As litigation continues, there remains uncertainty as to whether the EPA’s review and position will have an impact on injury claims in the US against manufacturers of glyphosate.

As litigation continues, there remains uncertainty as to whether the EPA’s review and position will have an impact on injury claims in the US against manufacturers of glyphosate.”

Marijuana – US Legislative update

  • The US. Attorney General recently rescinded the previous US administration policy of a relaxed federal government policy towards states that legalize marijuana. Therefore, U.S. attorneys in each state could now choose to exercise pre-emption rights over states laws for marijuana with the Attorney General’s support.
  • There will likely be a federal-state legal showdown in several states having strong support for marijuana legalization.
  • The future of the Rohrabacher-Bluemenauer Amendment – which prevents the Department of Justice from spending funds to interfere with medical marijuana state laws – also remains uncertain. The Rohrabacher-Bluemenauer Amendment is temporary and needs to be reapproved every fiscal year.
  • These two issues may impact the insurance industry’s appetite to write marijuana related businesses in the US in the short-term, at least until there is a clear understanding of the federal – state position on legality. Markets outside the US will also watch the outcome on the US position as it may affect global placements.

Perfluorinated Compounds (PFCs)

  • A major chemical manufacturer recently settled a long standing legal suit over PFC contamination. In the suit, the state of Minnesota alleged that the manufacturer intentionally caused groundwater contamination through its continued production of PFCs, resulting in significant human health harm and risks. Initially filed in 2010, this highlights how the issue of PFC contamination remains a key issue across states.
  • PFCs are manmade chemicals used widely in industry and consumer products, particularly those made to repel water or resist oil and stains. PFCs are not widely regulated, although the US EPA has taken some measures to raise awareness and manage exposure to this contaminant.
  • Per our internal Environmental Risk Consulting group, while the risk associated with this class of compounds has emerged (i.e. the potential risks from PFC contamination having been known for many years), it is expected that regulation and lawsuits will continue to evolve.
  • In addition to exposure at specific contamination sites, there is also the possibility of exposure from product liability against manufacturers of PFCs.

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