Our practice goes to the core of the way life science companies differ from other companies in terms of risk management needs.
Yes, life science firms need a full risk management regimen including:
- Contract management
- Loss control
- Insurance negotiation
- Claims management
But they also have unique, specific needs.
For example, using just insurance to illustrate:
Products/professional liability – life sciences are on the cutting edge of discovery in areas involving personal health and well being. It’s not good enough for a risk manager to look for the risks they already know of. It’s the risks we are not yet aware of that are the problem. It takes a sharp focus along with broad risk management experience to “see” what loss exposures might be lurking there, now and in the future.
Directors & officers liability – life science companies depend on discovery, trial and error and ultimately efficacy. It’s not a sure bet. At the same time, the companies are constantly raising funds to finance the work. Investors and lenders, seeing less than projected or even “expected” results, may sue directors and officers for mismanagement, misrepresentation, or misleading financial statements. Will the D&O respond to protect the Ds & Os in those cases? Care is needed to craft language that will overcome the insured vs insured exclusion which is often invoked when the suing parties sit on the board.
Research in progress – Run of the mill companies carry business interruption insurance protecting in the event of a shut down due to covered loss. The coverage is designed for lost net income and continuing expenses. The exposure in life sciences goes even further in that research in progress may be set back, milestones may be missed, and the future of the company may be threatened. The standard coverage doesn’t get to the heart of the exposure in life sciences. Coverage has to be carefully tailored to prevent financial chaos.
Non-Standard Coverages – Please see https://licatarisk.com/2018/05/25/life-sciences-companies-have-unique-exposures/
A LicataRisk client, a life sciences company, had a unique insurance need, and we applied the creativity to solve it.
Umbilical cord blood and tissue has unique medical uses. However the need for the blood and/or tissue may not arise for some time, and additionally, new applications for the material are being discovered over time.
In the meantime the material has to be cryopreserved using freezing at very low temperatures. The temperatures need to be, and are able to be, constantly monitored. When the material is being transported and when it is stored, there is a need for insurance to coverage. The big question is: what is the trigger for coverage, and when do we know we have a claim? It is complicated because we will not know for certain there is damage until years in the future when the material is put to use.
Working with the client’s scientists and underwriters at Lloyd’s of London, we developed an insurance product that responded and paid losses, at an agreed, fixed, amount per sample, when an event causes the temperature to rise above a certain level, from whatever cause.
Constant awareness of new exposures, and creativity in finding solutions, is the key to effective risk management.
We work with life sciences companies and executives, bringing the clarity of thought necessary, accompanied by the intensity of effort required, to fully protect them personally and professionally.