Its not so they stop from catching fire, its so they dont instantly go up in flames, allowing the people inside to hopefully escape.

It was never about outright preventing fires.

It was always about simply giving passengers the best chance to escape before the fire overwhelms all of the flame-retardant measures.

That said, the carcinogenic and neurological effects do kinda demand that a different solution be found right fucking quick.

I think many may now be too young to remember, but in the 70s and 80s, this was a big issue.

NY Times, 11 June, 1983 - DEMAND INCREASES FOR FIRE-SAFE CLOTHING

Clothing that can erupt into flames is coming under increasing scrutiny of consumer and fire safety organizations. They say Federal regulations governing the safety of fabrics used in clothing are too weak to protect the people who are most vulnerable: the elderly.

Those who most often suffer serious injury or death from clothing fires, safety experts say, are retired people who spend many hours of the day in such loose-fitting garments as bathrobes or housecoats. With the exception of children's sleepwear, for which special regulations were decreed in the 1970's, Federal standards allow clothing manufacturers to use all but the most extremely flammable fabrics.

Plastic fibers can melt to your skin, which isn't great considering you're in contact with the seats and carpets of the car. In an emergency, you're not prepared to deal with additional complications like that.

The article I linked here is pretty good, so I recommend reading it if you aren't familiar with this issue from back then. It will really help give you the other side of the issue to see why these chemicals are there to begin with.