Some insights here from Simon Webster, Head of Life Sciences, UK at Markel. More information on Markel’s Life Sciences proposition can be found here.
New research commissioned by Markel UK highlights a clear consensus among brokers with a focus on the life sciences sector see professional indemnity (PI) cover as mandatory for the sector with the majority of businesses providing advice, research or specialist services.
The finding highlights the sector’s complex risk profile. Life sciences businesses range from R&D-led biotechnology firms to pharmaceutical manufacturers and clinical trial operators. These companies face significant exposure to claims of professional negligence, errors or omissions. This is particularly the case where advice or results directly influence health outcomes, public safety or regulatory scrutiny.
In the words of one broker, “Professional indemnity, employer’s liability, public liability, product liability… and legal expenses as well” form the backbone of a tailored life sciences insurance programme. But it’s PI that consistently an essential area of protection.
PI cover vital for professional services and research organisations
The research shows that 91.7% of brokers rate PI and products financial loss liability as mandatory for life sciences companies. This is relevant across the board but especially so where firms work with institutions like the NHS, where contractual agreements often stipulate such cover.
The consensus from brokers is that if a business is offering professional advice, research or services with potential for financial or reputational damage, PI must be in place.
Other coverages rising in importance
While professional indemnity is seen as essential, brokers also highlight a number of other cover types as increasingly important across the life sciences sector.
Cyber and data risk insurance is rapidly gaining ground, with 42% of brokers now viewing it as mandatory. As life sciences companies continue to digitise operations, handle sensitive research data, and manage personal health information, the risk of cyberattacks or data breaches has become a concern.
Directors’ and officers’ (D&O) liability is another important area. 67% of the brokers questioned see the cover as mandatory, especially for larger or more complex businesses looking to grow and attract investors and where management liability claims could hamper progress.
Medical malpractice insurance is seen as critical for firms working in high-risk areas such as patient care, clinical trials, medical device testing or clinical trials. According to the research, 83% of brokers believe this cover is essential for businesses operating in those sectors, with the direct implications for patient safety and the potential for significant legal exposure.
Public and products liability also remains a core part of any life sciences insurance cover. While claims may be infrequently, the consequences when they do occur can be severe. 92% of brokers view this cover as mandatory protection against financial and reputational damage and with a contractual obligation to have the cover often in place.
Risk-specific tailoring matters
Across the board, brokers emphasise the importance of tailoring cover to align with clients’ precise activities, whether they’re producing physical products, conducting clinical trials or focusing on R&D.
Clinical trials insurance, for example, is essential for any business directly conducting trials, but less relevant elsewhere. Similarly, IP insurance is critical for innovation-led businesses but seen as less relevant by others due to cost constraints.
Markel’s research also indicates a growing need for specialist extensions, such as deterioration of stock in temperature-controlled environments and breakdown of vital equipment. In this instance, broker feedback highlighted that current coverage limits often don’t match the high value of perishable stock or machinery used in pharmaceutical and biotech settings.
Trusted relationships and tailored solutions
When placing business, many brokers look to financially sound insurers who offer comprehensive PI cover and also understand the regulatory and commercial realities of the life sciences sector. The ability to respond quickly to claims, offer direct access to underwriters and provide integrated legal and risk management services is seeing as a further advantage.
A specialist sector needing specialist protection
There are over 20,000 life sciences businesses operating in the UK with the sector driving revenue of £201 billion in 2023 alone. The sector is important for the UK economy but also faces very particular risks.
Brokers say they expect a specialist approach that reflects the sector’s particular needs, with professional indemnity cover being central to this requirement.
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