Insurance Marketplace Realities 2024 Spring Update – Life sciences
May 8, 2024
Product and professional liability rate predictions remain in the mid-single digits.
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Rate predictions: Life sciences
Trend
Range
Favorable risks and loss history
+3% to +5%
Pharmaceutical
The following items remain a concern for underwriters in the pharmaceutical space.
Acetaminophen: In the Acetaminophen MDL, plaintiffs allege that prenatal exposure to products containing acetaminophen caused a later diagnosis of autism spectrum disorder (ASD) and attention deficit hyperactivity disorder (ADHD) in the exposed children. This has led to many insurers attaching some level of acetaminophen exclusionary language to their product liability policies. The industry is closely watching developments in this MDL and its long-term impact on carrier appetite for acetaminophen.
Product impurities: We continue to see recalls for products containing benzene, which tends to be prevalent in personal care products, such as lotions, deodorants, antiperspirants, sunscreen, shampoo/conditioners, body wash and hand sanitizers. As a result, we are commonly seeing benzene added to the list of excluded impurities.
In response to the nitrosamine impurities issues stemming from as far back as 2018, the FDA has now provided drug manufacturers with critical guidelines for conforming their products to what the agency has determined to be safe nitrosamine exposure limits for patients. The product liability insurance marketplace continues to exclude claims in any way related to nitrosamines.
PFAS: As with several other sectors, litigation over per- and polyfluoroalkyl substances (PFAS) in the U.S. is causing concern for life sciences product liability carriers. These forever chemicals are prevalent in cosmetics as well as medical devices and pharmaceutical products. While there is still much unknown about the long-term effects of these chemicals, PFAS exclusions on product liability programs are becoming more prevalent.
Standard broad-based coverage exclusions: Virtually all insurance policies include a broad-based product exclusion for historically litigated pharmaceutical products. These exclusions in some cases can be modified, but care and research must be taken by the client and broker to review and negotiate with insurers to maintain the broadest coverage available.
Medical device
The following considerations continue to drive underwriting conversations in the medical device space.
Implantable medical devices. Capacity for certain highly litigated product classes, such as orthopedic implants, pelvic mesh and IVC filters remains limited. However, capacity remains generally available outside of highly litigated classes for implantable medical devices.
Convergence of product, technology and service. With the demand for medical devices rising, along with the rapid advances in technology, the convergence of medicine, technology and follow-on services is driving challenges for both insureds and insurers. For some clients in this intersection (i.e., wearables, web enabled devices, etc.), healthcare professional exclusions are being introduced by some insurers and can be significantly problematic for these dynamic companies. The adequacy of coverage for the unique breadth of exposures must be carefully considered for manufacturers striving to provide novel and more comprehensive products.
Service providers
Service providers face risk of financial loss given their position in the stream of commerce. Key conversations include:
Financial loss: Contract manufacturers, contract research organizations and other service providers are exposed to risk of third-party financial loss if an act or omission leads to a loss of revenue for their customers. It is imperative that these insureds consider including errors & omissions coverage as part of the product liability program to address this exposure. It is also important to review any cyber-related exclusions in the E&O coverage, ensuring that language dovetails with any cyber program to eliminate potential gaps in coverage.
Service provider coverage exclusions: Several core exclusions should be examined for service providers because reasonable arguments can be made for companies with a strong quality record to expand coverage to increase balance sheet protection provided by the errors & omissions insurance policy.
It is critical to the long-term success of life sciences companies that they can effectively quantify, mitigate and transfer risk. The convergence of the consumer product and healthcare industries continues to create coverage challenges that the insurance marketplace is struggling to keep up with. WTW is continually working to push the boundaries of traditional insurance policies to ensure that insureds have adequate coverage in place to meet evolving client needs.
Disclaimer
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).
