R.J. Reynolds Tobacco Company. Grossman died from lung cancer in 1995 at age
38. She started smoking at age 15.
R.J. Reynolds was also ordered by a Florida jury to pay $23.6 billion in punitive damages to the widow of Michael Johnson, Sr.,
who was a chain smoker for many years and
died of lung cancer in 1996. Johnson’s estate
had previously won a verdict of $17 million
as compensation for his family’s loss.
In a case against R.J. Reynolds and
Philip Morris, a Jacksonville, Florida,
jury awarded a $40 million verdict on behalf of the husband and daughter of Patty
Allen, who died after smoking two packs
of cigarettes a day for 36 years.
These award amounts were primarily
for punitive damages with less than $38
million awarded for compensatory damages. Tobacco is currently the leading
preventable cause of disease, disability
and death in the U.S.
With all of the unknowns, e-cigarettes
are still considered an emerging risk to
insurers and many are reluctant to provide occurrence-based coverage. Some
carriers make use of absolute health hazard exclusions, while others use tobacco
and carcinogen exclusions.
Health hazard exclusions vary and
some can totally exclude all health-related
issues, e-liquids, devices, or a combination
of these items. Carriers do not want to be
in a position where they have to defend or
pay out claims for several million dollars.
One example of a tobacco health hazard
exclusion excludes “bodily injury” including but not limited to the actual or alleged
emergence, contraction or exacerbation of
virtually any type of cancer or pre-cancer-ous condition, heart disease, arteriosclerosis, emphysema or any other lung-related
disease, or any other disease; caused by,
resulting from, arising out of the use, consumption ingestion, inhalation, absorption
of, contact with, or exposure to tobacco, any
product containing tobacco or any product
used with or related to the use of tobacco.
Another sample exclusion applies to all
liability similar to the above, but also ex-
cludes other metabolic effects of “tobacco,
tobacco products or tobacco byproducts”
use, including shortness of breath, low
resistance to infection or disease, psycho-
logical or mental injury or addiction.
“Tobacco, tobacco products or tobacco
byproducts” include but are not limited
to raw or cured tobacco, nicotine, tar, any
products containing tobacco or tobac-
co-related substances or chemicals, cigars,
cigar wrappers, pipe tobacco, cigarette fil-
ter, snuff, chewing tobacco, smokeless-to-
bacco products, cigarettes and cigarette pa-
per, tobacco smoke, second-hand smoke,
particles of tobacco, gaseous or solid res-
idue or by-products of tobacco tips and
filters, and any chemical, mineral or other
product or components sprayed on, ap-
plied to, customarily found within or used
in conjunction with any tobacco products.
The cigarette, e-cigarette and vaping industry statistics and studies appear to be rife
with controversy. Depending upon which
organization did the study, what was analyzed, the measurements used, the statistics
researched and who analyzed the results, it
is easy to find contradicting studies. Even
among smokers, those who use e-cigarettes
and those who vape, use different results
and analyses to support their opinions.
Other coverage concerns
With the regulations permitting e-ciga-
rette purchase and use in adult-only loca-
tions, retailers and bars that permit their
use will likely see an increase in expo-
sures. According to the National Associ-
ation for Shoplifting Prevention, retailers
lose up to $13 billion each year because
of shoplifters. E-cigarettes and related
products are small and expensive, and
their increased use raises the likelihood
of theft, particularly in shops where there
are no or ineffective security cameras.
With the limited data and lack of thor-
ough scientific studies on the safety of
e-cigarettes, insurers and consumers have
no way of confirming if there are thera-
peutic benefits to their use, or how their
health effects compare to cigarettes. Long-
term effects cannot yet be determined.
Further, the safety concerns pose a risk to
those insurers seeking to provide cover-
age to manufacturers of these products,
and their increased use poses additional
exposures to retailers and adult-only es-
tablishments that permit these products.
Prudent insurers will stay informed
about the emerging risks of these products, and keep abreast of federal and state
litigation and future government oversight
to protect their profitability potential.
Karen L. Sorrell, CPCU, is the associate
editor of Practical Insights. Contact her
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