Insurance Marketplace Realities 2023 – Life sciences
December 1, 2022
Life sciences product and E&O rates are stable as capacity remains high for products not in litigation or otherwise challenged classes.
Rate predictions: Life sciences
Risks with favorable loss history
+5% to +7%
Litigated or challenged product classes
Continuing to face more scrutiny
New carriers, most recently Hamilton Specialty, continue to enter the space, keeping product and E&O rates stable.
Zurich is gearing up to offer property and casualty programs with terms specific to life science companies. They are aiming to roll out their excess liability form before the end of 2022 with coverage for primary product liability to follow later.
For most companies domiciled in the U.S., limits up to $100 million in the domestic marketplace are easily obtainable.
There are considerably fewer carriers willing to offer a combined liability tower, where the general liability, auto, employers’ liability and foreign exposures share limits with the product liability. If a tower is currently combined, or insureds are considering a combined tower, be aware the auto fleet size and/or losses are being met with more scrutiny and will limit the appetite. Insureds should also consider that a severe auto loss could erode the limits available for product claims.
More carriers are offering cover for CBD products, although the appetite for ingestible products remains low.
Policies for clinical trials being performed in sanctioned countries can be secured, although capacity is limited, and master programs are unlikely to sit excess or provide difference in conditions/difference in limits (DIC/DIL).
In the spotlight
Monkey pox: In August of 2022, the FDA issued the first EUA (Emergency Use Authorization) for the testing of Monkey Pox. The FDA also issued an EUA for the JYNNEOS vaccine to increase production of the product to meet the expected demands. The product was originally approved in 2019 for prevention of smallpox and monkeypox.
European Union medical device regulations (EU MDR): May of 2024 is the deadline for medical devices sold in the EEA (European Economic Area) to fully comply with the new EU MDR regulations. The regulation was also expanded to include software along with a cybersecurity component. Different types of products, distributors, importers and authorized representatives all have varying compliance requirements. The adoption of and compliance with regulations should positively impact the placement of insurance, but only time will tell.
Diversity in clinical trials: There is a sharpened focus on the lack of diversity in clinical trials which could lead to certain populations being underrepresented. People of different ages, races and ethnicities may react differently to certain medical products, so diversity in research is imperative for health equity. Clinical research stakeholders (patient groups, community members, clinical research sites, CROs, academia, nonprofit and advocacy organizations, federal and state agencies, industry, etc.) are looking to increase their efforts to improve diversity, equity and inclusion efforts around clinical trials.
Transition from EUA for COVID-19 products: The FDA has released updated guidance as we approach the end of the public health emergency, outlining the steps manufacturers must take to return to traditional premarket pathways. Companies must be aware of the requirements and timelines to return to normal operations and processes.
Nuclear verdicts: The size of verdicts continues to increase, and they are becoming more frequent. Many nuclear verdicts are now composed primarily of an award of noneconomic damages (such as pain and suffering). Expert evidence and testimony based on sound science is critical to help prevent verdicts from becoming nuclear.
Companies engaging in mergers or acquisition should work closely with their insurance professionals as early as possible in the due diligence phase. Review of purchase/sales agreements, loss experience and product exposures are common and will be scrutinized in conjunction with the underwriting of past liabilities. The most favorable terms are more likely secured when detailed documentation is provided, and the information is underwritten well in advance of the acquisition date.
Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).