3 August 2015 Insurance

A firm hand on innovation

The unpredictability of the pharmaceutical and life sciences sector, given its infrequent nature and reliance on innovation, can result in devastating claims for insurers. However, insurers must continue to strive to smooth out the volatility and make these risks more stable.

In PwC’s 2014 17th Annual Global CEO Survey, which focused on the key findings in the pharmaceuticals and life sciences industry, the message that innovation in general is difficult to insure because there are no relevant models to facilitate underwriting and pricing was conveyed clearly.

The survey found that loss control and risk management services need to be invented on the fly for an innovative product or service, yet product and service innovation are essential for pharmaceutical and life science sector risks.

“This is extremely important to the life sciences sector,” says Mark Wood, president of LifeScienceRisk (LSR), which along with Sapphire Blue is the joint entity of Ryan Specialty Group’s RSGUM Healthcare, which was created in collaboration with Lloyd’s healthcare and life science syndicates to provide greater capacity for insureds and pool the expertise of many of the strongest Lloyd’s syndicates.

“Life science risks need significant capacity and responsive, creative risk management solutions to the newly emerging, innovative products and technologies that characterise the business.

“Prior to the formation of this facility, for example, life sciences companies would have to work with a broker to construct layered programmes with $5 million or $10 million sections from separate insurers.

“Now, they can buy a single policy with up to $25 million in limits from us. We add great value to our brokers and their clients by providing a stable and consistent underwriting platform.

“Our structure includes a number of Lloyd’s syndicates; because of that, we generally can provide more capacity.”

Organic growth

According to Deloitte Touche Tohmatsu’s 2014 Global Life Sciences Sector Outlook, the pharmaceutical, biotech and medical technology sectors are poised for growth. The $958 billion global pharmaceutical industry grew 2.4 percent in 2014; the $232.5 billion biotechnology industry boasted a 9.6 percent growth rate; and the $349 billion medical technology had a 2.6 percent growth rate.

“LSR has the ability to adapt to the evolving life science space, and to accommodate clients with operations in multiple classes. We are positioned to grow with the industry and to anticipate the risks to come,” says Wood.

LSR specialises in primary and excess product liability insurance for generic pharmaceuticals, novel drug manufacturers, drug delivery manufacturers, biotechnology and bio pharmaceutical firms, medical devices and nutritional supplements.

Coverage offerings are always evolving in response to industry changes and issues, including crisis management, cyber and social media concerns as well as sublimit for expenses associated with product recalls.

In addition, LSR offers an extended reporting period product to address some of the concerns arising out of the significant merger and acquisition activity in the pharmaceutical and life science arena.

Mark Wood is president & CEO of LSR. He can be contacted at: Mark.wood@lsrisk.com

Already registered?

Login to your account

To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.

Two Weeks Free Trial

For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at efield@newtonmedia.co.uk or Adrian Tapping at atapping@newtonmedia.co.uk