Complexity in Life Sciences Insurance
Canada’s life sciences sector is experiencing rapid growth and evolution, creating a complex risk profile that demands specialized insurance solutions. The industry encompasses a broad range of areas, including biotech, cannabis, nutraceuticals, and medical devices. Research from CNA revealed that Ontario’s life science sector recorded $846.8 million in venture capital in 2021, with this figure continuing to grow.
Jeff Somerville, founder and managing director of SUM Insurance, highlighted the sector’s “very broad remit” in a recent interview. The long development cycle of life science products adds another layer of complexity, with products taking years to reach the market. This prolonged development period, combined with a complex global regulatory landscape, necessitates insurance coverage that spans multiple jurisdictions and regulatory bodies.
Challenges in Insuring Clinical Trials
Insuring clinical trials presents unique challenges, as coverage requirements must comply with local laws and regulations. Richard Kelly, managing director at CTIS, emphasized that “clinical trials have to have specific insurance…the coverage requirements have to be in accordance with the local law.” Geographical location plays a crucial role in determining coverage requirements, with jurisdictions like Germany imposing strict liability, while Canada allows for more flexible arrangements.
The Importance of Expertise and Capacity
The panel of experts stressed the importance of working with insurers who have access to experts in the field and the capacity to handle complex claims. “It’s an expertise issue – finding someone who has been doing it for a long time and knows the space is really the most important thing,” said Dan Lopes, VP of primary liability at SUM Insurance. The need for a long-term insurance partner with deep sector knowledge and industry experience cannot be overstated.
Tailored Insurance Solutions
SUM Insurance has partnered with CTIS at Lloyd’s to provide a comprehensive insurance package tailored to the needs of life science companies. This package includes general and products liability, medical malpractice, and E&O coverage, as well as clinical trials insurance. The flexibility of this offering is designed to support a rapidly evolving field with often imperfect data or unforeseen future consequences.
Future Outlook
While the future of the sector appears promising, it is not without challenges. The market is becoming increasingly competitive, with more insurers entering the space. Kelly noted that “it’s a very competitive buyer’s marketplace,” with some insurers potentially underestimating the risks involved. Lopes warned that “if you don’t have a tailored product…you could get burned.” The regulatory and cultural landscape, as well as emerging risks such as claims linking familiar products to new conditions, will continue to shape the insurance needs of the life sciences sector.
Conclusion
In conclusion, the life sciences sector in Canada requires insurance solutions that are as complex and specialized as the industry itself. Insurers must have the expertise, capacity, and flexibility to provide tailored coverage that addresses the unique challenges of this rapidly evolving field. As Somerville summed it up, “Softening market, more competition – good for the consumer but challenging for incumbents like ourselves who are here for the long term.”
