With over 2 million users in the UK and rising, e-cigarettes have aggressively penetrated the smoking market. It is now more important than ever for insurers and brokers to be aware of the potentially significant risks.


  • Sleek advertising and trendy marketing campaigns have primarily centred on the absence of tobacco, the perceived harm reduction and possible use as smoking cessation aids. However, with an improved understanding of the health implications, supported by medical evidence, there is a significant potential for claims and prosecutions.
  • Regulation such as the European Tobacco Products Directive 2014/40/EU (TPD) will enforce stricter controls. Even so, as further medical evidence emerges, e-cigarettes may be demonstrated to be more harmful to health than currently anticipated. Could e-cigarette manufacturers, distributors, retailers and their insurers learn from the past experience of tobacco companies and take the necessary steps now to reduce the potential future risk?
  • It is clear there is a degree of caution. With the current lack of knowledge in understanding the true risks, the market remains largely underdeveloped. On the other hand, with the appropriate risk management practices in place, the perfect conditions have been created for those brave enough to enter and thrive in an otherwise untapped area of the market.

Key risk areas

There are three main risk areas associated with e-cigarettes:

  • Liquid solution composition: potential negative health impact on user/passive smoker.
  • Nicotine level and content: potential negative health impact on user/passive smoker.
  • Operating temperature of the devices: potential negative health impact and fire hazard.

Any toxins inhaled would arise from the constituents of the nicotine containing solution and its by-products released in the heating process. Findings suggest that high temperatures may induce the formation of known carcinogens such as formaldehyde and acrolein. More worryingly, the exact levels of nicotine and the other solution substances, their by-products and the actual amount that is inhaled, varies from product to product without appropriate regulations in place.

Arguably, current ‘teen vapers’ may be in their 30s or 50s before any ill effects emerge. They may not necessarily suffer from lung cancer but could instead face higher rates of asthma, bronchitis or other inflammatory pulmonary diseases, which could lead to reduced enjoyment of life, increased obesity and morbidity and ultimately increased pressure on the health services.

A consolidation of a number of class action lawsuits filed in the US against an e-cigarette manufacturer has already occurred, over allegations that it “deceptively” marketed its products as a healthy alternative to traditional cigarettes.


Regulation is the key to providing certainty to insurers surrounding the risks associated with e-cigarettes.

Manufacturers and suppliers currently benefit from a low regulatory barrier and take full advantage of the freedom to advertise. E-cigarettes are not covered by current anti-smoking regulations. They are generally regulated in the UK under the General Product Safety Regulations which fail to impose the regulatory controls of the TPD but rather deal with breaches in response to complaints.

UK Government agencies are however actively taking the necessary steps to regulate their use as e-cigarettes are soon to come under the control of the Medicines and Healthcare Products Regulatory Agency. This will see them become regulated medicines in the UK in 2016, transposing the new TPD into national law, with full compliance expected by 2017.

In essence the TPD will:

  • Stipulate regulatory controls for e-cigarettes that do not fall under the definition of a ‘medicinal product’.
  • Improve the function and regulation of the tobacco and tobacco-related products market.
  • Prohibit advertising of non-licensed nicotine-containing devices.
  • Ensure products carry health warnings.
  • Set maximum nicotine concentration levels.
  • Set stringent notification and reporting obligations on manufacturers.
  • Impose full responsibility on suppliers for quality and safety of products when used under “normal or reasonably foreseeable conditions”.

Producers will have to choose whether their product be licensed as a ‘medicinal product’. This will be effectively be a balancing act between manufacturing costs and the advantages of medicinal licensing.

Risk management

With the majority of manufacturers based in China, distributors and retailers in the US, UK and the rest of Europe would be in the firing line for any potential lawsuits.

In any event, as is the case with other products manufactured in the Far East, it would be much harder for distributors to subrogate claims against a manufacturer based in a different country and subject to different laws.

Distributors and retailers must therefore ensure that they:

  • Fully understand their supply chain.
  • Have the necessary contractual documentation in place.
  • Ensure suitable age restrictions and labelling about potential health effects are included.
  • Have the appropriate level of insurance.

Above all, insurers should always encourage their insureds to practice proactive risk management from the outset.