Industry Spotlight: Life Sciences Global Market and Claims Overview

Global Market Overview

The Life Sciences industry is considered a relatively high-exposed industry to insurable risks, while risk management and regulatory governance is generally strong. The industry has been associated with severe Product Liability losses over the past 20 years and remains exposed to a large number security class actions and associated D&O claims – although these have decreased over the last two years. More recently, the exposure to (contingent) business interruption and supply chain disruption risks has been in focus as a result of cyber losses and the pandemic.
The insurance market remains challenging but is continuing to stabilize, and competition is increasing with the key exception of Cyber coverage.

In the Product Liability space, there is a continued increase in underwriting due diligence and questions on emerging risks. Key challenges include opioids, gene therapy and rare disease products, communicable diseases, social inflation, and nitrosamine product contamination. New specialized markets are entering this space, but their capacity is limited.
In the D&O space, insurers have now adjusted to Life Science companies and better understand the risk. The pricing adjustments over the last few years have returned insurers to a profitable position, while the number of security litigation cases has decreased for the second consecutive year, leaving insurers more confident and comfortable with Life Science D&O risk. With more markets available, competition is emerging, driving better pricing results for insureds.

As of January 31, 2022, the new EU Clinical Trial Regulation went into force after years of delay. The new regulation will introduce a single unified approval system with a central portal for both sponsors and regulators for application and authorization of trials throughout Europe. There will be a transition period until 2023 when all new clinical trials will follow the new regulation, and in 2025 all ongoing trials will be subject to the new regulation. The insurance market is generally ready with solutions to support the new regulation.

Opioid Lawsuits

Opioid lawsuits allege opioid manufacturers caused the opioid crisis through deceptive marketing practices, misrepresenting that opioids had a low risk of addiction and touting benefits without disclosing the medication's risks. Several drug makers and distributors have agreed to billions in settlements. The latest settlement of USD 26 billion includes four of the largest US Life Sciences companies.

Nitrosamine Impurities

Nitrosamine is an organic compound that people are exposed to in low levels in our everyday lives through water and food. In addition, in some cases, during the manufacture of the active pharmaceutical ingredient (API) a chemical reaction can occur that causes Nitrosamine. Nitrosamine may increase the risk of cancer if people are exposed to it above acceptable levels and over long periods of time.