A potentially harmful trio of chemicals commonly found in beauty products could pose significant liability risk to manufacturers and suppliers if bodily injuries can be linked to exposure, and may have a considerable impact on the insurance industry, according to a report by Allianz Global Corporate & Specialty (AGCS) and Praedicat.
The report claimed that the so-called ‘Toxic Trio’ of hazardous chemicals has the potential to generate in excess of $100 billion in losses to the U.S economy due to widespread consumer and workplace exposure.
Insurance companies currently offer general liability and standalone product recall policies to assist companies with the significant costs that could occur from a chemical exposure event.
Consumers and workers are exposed to hundreds of chemicals used in the cosmetics industry, but AGCS and Praedicat identified three chemicals – dibutyl phthalate (DBP), toluene and formaldehyde – as being particularly hazardous.
These chemicals are found in nail polish, perfumes, body lotions, and other personal care products, and exposure is likely to increase as global sales for skin care products are estimated to grow by 40% to $180 billion by 2024.
The report said that manufacturers and suppliers are also at risk of product recalls if regulators deem the trio to be too risky to consumers, or product mislabelling for those who market their products as ‘three-free.’
“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,” Hohmann added.