The insurance industry has for a number of years sought to apply restrictions, through exclusions, to product liability insurance policies for a number of chemical substances. These chemical substances have historically been the subject of litigation involving bodily injury or environmental damage, which has resulted in the insurance industry excluding them from insurance wordings.

The outcome of the authorization and restriction processes of REACH in the European Union (EU) will classify a number of chemical substances to be considered either harmful to human beings or the environment, resulting in ban, authorized or restricted use. As the insurance industry already excludes several chemical substances from product liability insurance policies, the potential exists for chemical substances that are identified under REACH as being either harmful to human beings or the environment and therefore which may not be approved for manufacture in, import into or use in the EU, to be added to the list of chemical substances excluded by product liability insurance policies.

The effect of exclusion may be to remove all future insurance cover relating to the chemical substance excluded, from the date that the exclusion is applied. Marsh's white paper, Product Liability and REACH, discusses this problem, looks at the wordings that the insurance industry provides and the potential problems that exist with those wordings and identifies what action should be taken.