The hazards are real, both to humans and to insurance companies.
As well it should be!
These systems were developed in Europe for application over masonry. They were brought here and applied over exterior gypsum board or oriented strand board sheathed wood frame construction. The results have been disastrous, in many cases.
Go to http://www.co.new-hanover.nc.us/INS/EIFS/EIFS002.HTM for one county in NC that had huge problems.