E-Cigarettes and Vaping - The Growing Hazardous Plume for P/C Insurers
Recent headlines are sobering: At least 530 confirmed and probable cases of vaping-related illness in 38 states and the U.S. Virgin Islands, with seven deaths. While relatively small numbers at present, a huge pool of potential victims exists within the estimated 10.8 million people in the United States who admit to vaping. Some surveys have found a much higher number of individuals, particularly youths, using e-cigarettes.1
Against this backdrop, the Centers for Disease Control and Prevention (CDC) recently advised that anyone who uses a vape device should consider stopping while public health officials investigate. For its part, the U.S. Food and Drug Administration (FDA) is likely to ban flavored e-cigarettes that appeal to teenagers, similar to what Michigan recently did on a temporary basis.
Who’s at Risk
All seven people who died were adults. Most of those who became ill were in their early teens to early 20s - and healthy. Because investigators haven’t yet isolated the specific cause, anyone who uses e-cigarettes or vaping devices - either nicotine or marijuana - may be at risk.
Why Is This Happening?
While much remains to be learned, there are strong indications that the vaping fluid used by sick patients contained THC (the psychoactive drug found in marijuana) and the chemical vitamin E acetate, commonly found in items such as olive oil, certain topical skin treatments, and almonds. When heated by the vaping device the compound becomes vapor, then returns to oil as it reaches the lungs. Health officials are exploring this as a possible cause, given that lungs can only process gases and not other substances.
What Will the Future Hold?
At least one vaping-related lawsuit has been filed by a young adult who claims to have become addicted to vaping and suffered life-threatening injuries as a result. We expect the FDA to move forward with its ban and for other states to join Michigan in banning flavored e-cigarettes.
While a design or manufacturing defect can usually be traced back to the manufacturer, e-cigarettes pose unique challenges. This is because most e-cigarettes are manufactured by Chinese companies that frequently shut down without notice, making it difficult to obtain jurisdiction and enforce a judgment. For this reason, distributors, wholesalers, and retailers may be targeted by plaintiffs seeking to access available insurance coverage. Retailers may also face another exposure: violations for selling e-cigarettes to minors, a process that is easier to track because many transactions are done electronically rather than with cash.
Concurrently, we expect the scientific inquiry to continue with a specific focus on how the lungs metabolize the oils used in vaping e-cigarettes.
At this juncture, this much is known: It’s debatable whether vaping is a safer alternative to “heat and burn” cigarettes. Beyond that, we may learn in the months ahead that vaping carries a litany of previously unknown health hazards, with a latency component like with other toxins discovered over the past 50 years.
4 Things Insurers Can Do
As this story continues to unfold, we would suggest the following:
- Review your small commercial retail book to determine whether any are selling e-cigarettes. Such retailers could include convenience stores, gas stations, and liquor stores.
- Think about using the following forms to specifically exclude e-cigarettes:
- CG 21 33 11 85 Exclusion - Designated Products (For use with CGL and Products policies)
- CX 21 15 04 13 Exclusion - Exclusion - Designated Products
- Consider adding the following ISO exclusions to your CGL policies as they become available:
- CG 40 12 19 Exclusion - All Hazards in Connection with an Electronic Smoking Device, Its Vapor, Component Parts, Equipment, and Accessories
- CG 40 13 19 Exclusion - Health Hazards, Electronic Smoking Device Vapor
- CU 34 20 12 19 Exclusion - All Hazards in Connection with an Electronic Smoking Device, Its Vapor, Component Parts, Equipment, and Accessories
- CX 21 77 12 19 - Exclusion - All Hazards in Connection with an Electronic Smoking Device, Its Vapor, Component Parts, Equipment, and Accessories
- CX 21 78 12 19 - Exclusion - Health Hazards, Electronic Smoking Device Vapor
- Keep in mind that the duty to defend exists in all standard CGL occurrence forms with the potential to incur uncapped defense costs.
Consult your Gen Re account executive for additional information and/or assistance in developing an underwriting strategy to address your vaping-related exposures.