Chemicals in personal care products may expose manufacturers and suppliers to latent liabilities

Allianz Global Corporate & Specialty SE (AGCS) and Praedicat just released  Emerging Liability Risks: The ‘Toxic Trio,’ a new report examining how chemicals commonly found in beauty products may place manufacturers and suppliers at significant liability risk as well as their potential impact on the insurance industry. 

The cosmetics industry uses hundreds of chemicals in manufacturing, dozens of which can be present in the final product, leading to potential consumer and workplace exposure, particularly in nail and hair salons. Three chemicals have particular notoriety for their use in nail polish – dibutyl phthalate (DBP), toluene and formaldehyde. Scientists have identified this “Toxic Trio” of chemicals, which are also used in perfumes, body lotions and other personal care products, as hazardous.

In Africa, the beauty and skin industry is not well-regulated, making it a lot more risky for consumers to get exposed to dangerous chemicals. Currently, there is a rising trend in skin bleaching and it is estimated that over 70% of women in Nigeria are using skin lightening products. This phenomenon is creating concerns around increasing health issues that may be caused by these products. Many of these skin lightening products are easily accessible in the region, despite them being banned in countries such as South Africa, Mali and Cote d’Ivoire.

With global sales for skin care products estimated to grow by 40 percent to $180 billion by 2024, manufacturers and suppliers face liability risk if bodily injuries are linked to “Toxic Trio" exposure. These risks include:

• Product recalls if a product containing one of the “Toxic Trio” is deemed risky to consumers by regulators, whose attention is increasing.
• Product mislabeling is a growing threat. Manufacturers who market their products as being “three-free” could be held liable if their products contain any of these chemicals, even if it is not their fault. 
• Latent liability from DBP affecting both consumers and workers has the potential to generate in excess of $100 billion in losses to the U.S. economy, based on Praedicat’s model estimates, due to the broad exposure.

“Companies need to implement rigorous testing to reduce the risk of mislabeling and proactively monitor scientific literature to identify future risks rather than reacting to public perception or regulatory action,” said Michael Hohmann, Global Head of Liability at AGCS. “By leveraging science-based business intelligence from Praedicat, AGCS helps clients make more informed decisions about the chemicals, products, substances and processes involved in their business.”

Insurance companies currently offer general liability and standalone product recall policies to assist companies with the significant costs that could occur from a “Toxic Trio” event.

To view Emerging Liability Risks: The ‘Toxic Trio,’ please visit: https://www.agcs.allianz.com/insights/white-papers-and-case-studies/emerging-liability-risks-toxic-trio
                                

About Allianz Global Corporate & Specialty

Allianz Global Corporate & Specialty (AGCS) is the Allianz Group's dedicated carrier for corporate and specialty insurance business. AGCS provides insurance and risk consultancy across the whole spectrum of specialty, alternative risk transfer and corporate business: Marine, Aviation (incl. Space), Energy, Engineering, Entertainment, Financial Lines (incl. D&O), Liability, Mid-Corporate and Property insurance (incl. International Insurance Programs).

Worldwide, AGCS operates with its own teams in 34 countries and through the Allianz Group network and partners in over 210 countries and territories, employing almost 4,700 people of 70 nationalities. AGCS provides insurance solutions to more than three quarters of the Fortune Global 500 companies, writing a total of €7.4 billion gross premium worldwide in 2017. AGCS SE is rated AA by Standard & Poor’s and A+ by A.M. Best. For more information please visit www.agcs.allianz.com or follow us on Twitter @AGCS_Insurance LinkedIn and Google+.

Cautionary Note Regarding Forward-Looking Statements

About Praedicat

Praedicat helps companies take risks and grow in the face of emerging risks. Praedicat is based in Los Angeles, California and has offices in New York and London. With data, risk models, and software products rooted in science and law, and a business-minded approach to client services, Praedicat is uniquely positioned to not only identify emerging risks, but translate them into actionable business opportunities that result in profitable and sustainable growth. Praedicat’s science-based data and analytics are used by insurers and corporates to improve risk transfer and product stewardship. To learn more, visit praedicat.com.

[i] https://medicalxpress.com/news/2018-08-skin-africa-addiction.html

[ii] https://face2faceafrica.com/article/skin-bleaching-isnt-passe-in-africa-its-just-been-re-branded