Munich Re and Marsh are hoping life sciences will respond to new insurance coverage coverage designed to protect them in the wake of U.S. Food and Drug Administration-mandated manufacturing suspension and other regulatory actions.
Their product, dubbed NDBI Pharma IQ, combines risk transfer and consulting services. It provides up to $10 million in aggregate non-damage business interruption coverage to life sciences companies that must suspend manufacturing and distribution due to a violation of good manufacturing processes (as defined by the FDA). As well, it also offers extra expense coverage for up to 10 manufacturing locations – those owned by the company and also third party operations.
On top of that, NDBI Pharma IQ provides free risk assessment and quantification services. Marsh Risk Consulting supports this part of the policy, with forensic accounting, business continuity and property risk experts. Essentially, clients get 60 hours of consulting services to help assess and manage their supply chain exposures to possible FDA regulatory actions.
Marsh and Munich Re said they launched the new coverage because FDA-mandated manufacturing suspension isn’t typically covered by traditional business interruption insurance, because the event doesn’t stem from physical damage to the insured’s property.
“The cover was developed after extensive research into the pharmaceutical industry and following many discussions with risk managers,” Claudia Hasse, head of special enterprise risks at Munich Re, said in prepared remarks. “NDBI Pharma IQ was created to address an uninsured need – the impact of financial losses resulting from suspension of production following regulatory enforcement.”
Doug Carey, Marsh’s U.S. life sciences practice leader, said in a prepared statement that regulatory action that leads to mandatory/enforced suspension of manufacturing and distribution “can cost life sciences companies millions of dollars in remediation, reputational damage and lost income.”
Sources: Munich Re and Marsh