EMF Radiation Poses Significant Emerging Risk for Insurers
Pogo was right: "We have met the enemy and he is us."
As Guy Carpenter recently noted,
The insurance industry remains diligent and cautious as they are cognizant that fortunes can change quickly. There remain a number of regulatory, legal and financial-related issues that could increase the frequency and severity of D&O losses. Of particular concern are continued increases in securities class action activity, corporate bankruptcies and bank failures.
The industry also remains focused on continued issues of subprime claim emergence.
But as the industry continues to focus on claims emanating from these past issues, there is an emerging issue that is still off the radar screen – litigation surrounding cell tower placement in residential areas and on schools. Indeed, coming soon to a corner near where you work or live: cell towers.
In the late 1990s, some U.S. insurers became concerned about emerging EMF risks, but claims never developed as expected and the industry became complacent. However, with the proliferation of such towers in the past two years, the potential for significant EMF losses is re-developing.
Cell Phones/Towers Are Proliferating and Pose Danger to Health
With increased demand for hand-held device communications, more data is being transmitted over more wireless networks, requiring an ever increasing number of cell towers to meet the demand. An estimated 260,000 towers exist in the US, which represents a 48% increase over the past 4 years. With over 3 billion cell phone users globally, there are multiple towers in place within an 8 mile radius of most of us, with an even greater concentration in urban areas.
While we all enjoy using our various hand-held devices – most significantly our cell phones, walkie-talkie’s, garage openers, microwave ovens, GPS, wi-fi computers and other wireless equipment – there is increasing evidence that the electro magnetic frequency (EMF) radiation emitted from such devices can damage one’s health.
The danger of microwave radiation from cell phones and cell towers is becoming an issue for debate all over the world, with the U.S. as the laggard. However, the U.S. is quickly catching up to other nations. Residents are protesting against cell towers more than ever in meetings of city councils, planning commissions, and other government bodies. Citizens have attempted to block cell towers in California, New Jersey, Maryland, Illinois, and North Dakota. Litigation often follows such protests. Indeed, in late 2008, New York’s Westchester County Supreme Court enjoined cell towers on a condo roof in a precedent-setting decision that was upheld last week on appeal.
Government agencies of the UK, France, Germany, Switzerland, Israel, Finland and the European Parliament have all recommended limiting cell phone exposure, particularly for children. In the U.S., however, FCC emission standards were established by the Telecommunications Act of 1996, and those standards are woefully inadequate for current exposure levels. Other nations have maximum emission limits several multiples below the allowable maximum levels set by the FCC.
As an indicator of the rising likelihood for litigation and/or new regulation, the U.S. Senate held hearings two months ago with witnesses testifying about cell phone usage and potential impact on human health. Those witnesses testified about cancer, brain and salivary gland tumors, and other negative health effects such as leukemia, especially amongst children. Indeed, there appears to be a plethora of data suggesting that a multitude of illnesses may be caused by EMF radiation -- birth defects, miscarriages, chronic fatigue, headaches, cataracts, heart problems, stress, nausea, chest pain, Alzheimer’s, autism etc. There has even been speculation that EMF emissions may be one of the reasons we are losing our bee population.
Impact on Insurers: Increasing Litigation
Insurers have often speculated on the next risk to cause major losses. Post 9/11, the industry became concerned about NBC (nuclear, biological, chemical) risks resulting from terrorism, and the result was TRIA legislation. While seemingly more innocuous, our electronic devices may also prove lethal to ourselves and to the insurance industry.
A direct causal effect to health issues resulting from radio-frequency emissions has yet to be definitively proven, but the data links to adverse health effects from this risk exposure are currently tracking closely to the way tobacco and asbestos losses developed. While to date numerous studies have produced contradictory results, many of those contradictory studies have been funded by the telecom industry, which has an even stronger lobby group than the pharmaceutical industry. Many experts are convinced that the threat is real. As EMF exposure is rapidly increasing, so, too, are the lawsuits.
In 2002, the West Group published an article in the Real Estate Finance Journal noting that “EMF litigation typically includes personal injury claims or claims of property damage or devaluation. This toxic tort litigation may be founded in trespass, nuisance, products liability, inverse condemnation, eminent domain or other theories. Personal injury claims based on EMF exposure have not fared well in the courts, because no one has presented the scientific evidence that EMF cause particular adverse health effects. Property claims, however, have been much more successful in the courts. Most of the property claims have asserted that EMF has diminished the value of the property.”
A 2007 Swiss Re study, which updated an earlier review of the topic, concluded that it can be expected that plaintiffs will win suits dealing with the EMF issue, which could confront the industry
with claims on a scale which could threaten its very existence….It is to be expected that costs for defense will be immense….for EMF health risk and EMF liability risk.
As there is greater movement towards a green environment, it is likely that such litigation will increase. Yet, only a few insurers have expanded their pollution exclusions to include electric, magnetic, and electromagnetic contaminants and radiation. Expect many more to consider such exclusions in the future.
Financially, the EMF issue is not just of paramount importance to the insurance industry. In this soft economy, many firms are forgoing the purchase of environmental insurance for their projects, and so any ensuing litigation could be devastating.
Disclosure: No positions