With constant developments in medical devices and research and development (R&D), it is imperative companies operating in this sector have insurance to cover the wide range of risks they are exposed to.
We have discussed with our life science team what some of the most common myths surrounding insurance for R&D, medical devices and dietary supplements and how you can respond to them.
Companies providing clinical trial services need clinical trial insurance
CFC’s clinical trial insuring clause is designed to cover bodily injury to a research subject from the trial’s investigational product, when the researcher is the sponsor of the clinical trial. This typically means they have developed the product. If the applicant is a service provider and a clinical trial sponsor, CFC can offer this coverage.Companies paid a fee in exchange for services provided to the clinical trial sponsor require professional liability insurance. This is available under CFC’s life science wording with the clinical trial insuring clause designed to cover bodily injury from the trial’s investigational product when the insured is the sponsor of the clinical trial.
Wholesalers and distributors have no product liability exposure
Wholesalers and distributors of medical devices, nutraceuticals and pharmaceuticals can often pass back product liability claims to the manufacturers of those products. Unfortunately, there will always be a contingent product liability exposure. The manufacturer could purchase lower limits than the distributor, or their policy might be with a poorly rated insurance company. In these situations, where the manufacturer’s policy was assumed to provide cover, the wholesaler or distributor’s policy would step in to pay claims.Rights of recourse are important from an insurance perspective. If a company outsources its manufacturing to, or imports its products from, territories with lower manufacturing standards, or in which lower limits of insurance a purchased; the company may struggle to enforce the third party to accept its legal liabilities and responsibilities in a contract.In addition, manufacturers may be based in a different country to the wholesaler or distributor.
We’re not a technology company, so we don’t have a cyber exposure
Every company who uses technology or the internet could be exposed to cyber-attacks. The life science industry relies on data to function, whether it’s a biotech performing research into a novel pharmaceutical or a CRO that holds data for the clinical trials they manage. A cyber-attack could exfiltrate business critical data, leading to delays in life saving trials or the cause of business interruption, preventing a biotech from moving to the next stage of research.A ransomware attack on a manufacturer could take over their computer systems and stop their production lines. This would result in costs for ransom payments to get the systems up and running again. This would also cause business interruption costs since the insured would be behind on their production schedule and potentially liable of costs to their clients for breaching their contracts. Similarly, an online retailer who relies solely on their website could be severely affected by a cyber-attack. This could cause them a large loss of sales and business interruption costs. The company may also suffer reputational damage and may incur heavy notification costs alongside potential compensation costs if customers data was leaked.In the event of a cyber event, CFC’s policy will cover breach notification costs, rectification costs in the event systems are damage, loss of income following an interruption to business activities caused by system downtime or as a direct result of the loss of current or future customers caused by damage to your reputation.
A clinical research organization only requires medical professional liability
Medical professional liability will help to protect the insured against negligence in the scope of rendering or failing to render healthcare related services which result in a bodily injury but does provide protection against third party financial loss claims which include allegations of negligence in the providing of professional services.At CFC, their policy can protect the research organization against both financial and medical professional loss.
We are private company we do not need directors & officers insurance
Many individuals believe that because a company is private that their liability is limited. However, the limited liability only protects the shareholders to the extent of their investments. This does not reflect on the directors or officers of a company whose liability is unlimited. Therefore, if they do not have D&O insurance and the company is unable or unwilling to protect them, the directors and officers will have to support their own defense.