The UK life sciences sector is fast-moving and operates across the globe which can leave you exposed to new risks and liabilities, often in unfamiliar places.
Having a robust life science insurance solution in place is vital to building resilience against these risks.
But insurance is complicated enough for any business – and that’s before you add in the challenges of operating within the life science sector.
Why is life science insurance different from other industries?
Insurance is essential for any business. Protecting your business from the risk of the financial impact of something happening is fundamental to planning for success.
Risks range from physical, such as theft, flood, and fire, to liabilities including damage to third parties, cyber-attacks, and data security.
There’s also people risk to consider – how would your business function without a key individual and how do you attract and retain a talented team?
Insurance can help you build resilience in all of these areas – and more.
But when it comes to companies in the life sciences industry, the risks can be far more complex and the solutions need to meet the specific exposures.
Whilst a company operating in the life sciences industry will need the usual, legally required covers, there are often additional significant challenges, such as:
- Clinical trials
- Stock deterioration of R&D materials
- Intellectual Property (IP) Infringement
- Seeking funding and the associated investor requirements
Insurance coverage is often based on historical data such as sales, profit, etc. However, for life science businesses, there may be little precedent for the risks that have been identified.
What is specialist life science insurance?
There are few off-the-shelf insurance products that provide for science and technology-based businesses, so getting specialist advice and coverage is essential.
Many “standard” or “traditional” policies will not provide the scope of cover needed by life science businesses.
By definition, specialist life science insurance is designed for companies that work within the sector.
Specialist life science insurance advisers speak your language, understand your business sector, and can help you identify the risks you face.
How can life science insurance protect your business?
Any business with more than one employee (including a director and company secretary) is required by law to have employers’ liability insurance.
It is also likely that you’ll need public liability insurance and at some stage, product liability insurance.
Beyond these, the cover gets more specific to the sector. For life science start-ups, it is possible to arrange these via a package but even this is designed to meet the needs of this industry sector.
Covers can include:
- Directors’ & officers’ liability insurance (D&O) – usually required by investors.
- Clinical trials liability insurance – protection against the cost of settlement or liability where a clinical research subject suffers an injury arising from participation in a trial.
- Intellectual property insurance (IP) – with the ongoing development of new medicines, medical devices and procedures, software, applications, and AI, it is crucial that fresh concepts and distinctive qualities be safeguarded.
- Property insurance – protects your physical assets, including office and laboratory machinery and equipment, computers & data, stock, documents, lab books, prototypes and R&D materials, temperature-sensitive stock and mobile equipment.
- Business interruption – protects your income streams where there’s an unexpected interruption to business operations. It can provide financial support for recurring R&D costs, revenue loss, profit loss, and other unforeseen costs.
- Key person protection – another cover often required by investors, this is a life assurance policy that can support the company financially if a key individual, such as a director or the brains behind the science, were to die or suffer a critical illness.
- Cyber and data risk – cyber insurance comes in all shapes and sizes. Cyber cover for life science business needs to be specific and can rarely be achieved by a standard or traditional policy.
Who needs specialist life science insurance?
The life sciences industry encompasses a variety of businesses ranging from biotech and bioinformatics to drug discovery and vaccine development as well as large pharmaceutical companies.
The work carried out can include clinical trials, the design and manufacture of medical devices, Artificial Intelligence (AI), and the development of new health tech.
As well as the business itself, there’s also a range of supporting organizations that form part of the lifecycle of a life science business:
- Contract Research Organizations (CROs)
- Contract Manufacturing Organizations (CMOs)
- Clinical Trials Support Organizations (CTSOs)
- R&D organizations
Insurance will be essential throughout the journey from the idea, concept, and start-up through to production, manufacturing, and sales.
Insurance for the life science industry – can one size fit all?
Insurance needs will always change as a business grows – regardless of which sector you operate in. Many life science companies being as a spin-out from a university or start-up enterprise which has gained seed funding from investors.
At this early stage, the insurance needs will be determined by the exact nature of the business and the work being carried out – as well as any investor requirements.
Life science businesses can often grow rapidly and so therefore the insurance programme will need to adapt and change to meet the emerging risks.
These can include expansion overseas – for example, clinical trials outside of the UK, wider exposure to business interruption with the involvement of third parties such as CROs as well as people risk – attracting and retaining the talent needed for the business to continue to grow and succeed.
How to find specialist life sciences insurance for your business
First and foremost, you need to engage with a firm that you feel confident with. You will be relying on them to help you protect your business so having trust in their ability is extremely important.
Do they really understand the life sciences industry? What’s their experience and what can they offer you?
Recommendations are worth their weight in gold. Talk to your peers at networking events or someone you know in the industry and ask for a recommendation and perhaps an introduction to their provider.
They’ll likely be using a specialist life science insurance broker and that’s key to putting the right insurance solutions in place.
There’s a real risk that simply buying a policy online will leave you exposed to gaps in the cover you actually need.
A specialist life sciences insurance adviser will take the time to really get under the skin of your specific business. They’ll help you identify – and crucially, understand the challenges you face and the risks you could be exposed to.
Only then will they put together a bespoke insurance and risk management programme for your business. This should include a commitment to reviewing everything at least once a year, if not more often.
Companies operating in the fast-paced life sciences industry sector can grow rapidly and your insurance must flex and adapts as needed.
Conclusion
As we’ve discussed, the risks facing the life sciences industry are complex. Whether your organization is involved in R&D, clinical trials, AI, or developing medical devices, you need the right insurance coverage at the right time to protect your business.
Whether you’re seeking insurance for your start-up or spin-out life science business, or approaching the renewal date of your current insurance, it’s well worth exploring the life sciences insurance market.
Taking the time to consider the advice and support you need and engaging with a specialist life sciences insurance broker can make the difference to the success or failure of your business.
Image by Kindel Media from Pexels
The editorial staff of Medical News Bulletin had no role in the preparation of this post. The views and opinions expressed in this sponsored post are those of the advertiser and do not reflect those of the Medical News Bulletin. Any Web sites linked from Medical News Bulletin site are created by organizations outside of Medical News Bulletin and are the sole responsibility of those organizations. These links are strictly provided by Medical News Bulletin as a convenience to you for additional information only. Medical News Bulletin does not approve or endorse the content on any third-party Web sites and is not responsible for the content of linked third-party sites or third-party advertisements, as well as does not make any representations regarding their content or accuracy. Your use of third-party web sites is at your own risk and subject to the terms and conditions of use as per such sites policies. Medical News Bulletin does not provide specific medical advice, diagnosis or treatment and hereby disclaims any assumption of any of the obligations, claims or liabilities..
