By CYRIL TUOHY, managing editor of Risk & Insurance®
Pollution liability insurance limits for the U.S. life sciences industry averaged $8 million, with half of all companies also having limits of $10 million or more, according to the 2009 Life Science Benchmark Report published by Marsh.
Deductibles averaged about $92,000 per company, with a median deductible of $75,000. The average price per $1 million of limit was $4,004, with a median price per $1 million of limit coming to $2,535, the report also noted. Prices have probably dropped slightly as we are in the midst of a softening trend.
Among the claims that hit the life sciences and pharmaceutical industry in 2008 is the $32 million in damages faced by one major pharmaceutical company, according to the report's authors, Bruce Belzak and Dusan Jovanovic.
The claim is in connection with the leakage of 15,000 gallons of waste material from an underground storage tank. The waste, which included carbon tetrachloride, eventually reached an underground aquifer. The aquifer supplied more than 10,000 people with drinking water.
Following an investigation by the U.S. Environmental Protection Agency, the company was ordered to clean up the mess and set aside funds to reimburse victims of the contamination, according to the report.
"Despite generally excellent attention to environmental procedures and policies at life science facilities, there have been numerous instances involving wastewater discharges, air discharges, and improper disposal of materials," Belzak and Jovanovic wrote.
In another incident last year, a biotechnology lab was hit with cleanup costs and third-party claims for property damage and bodily injury in connection with an explosion and subsequent fire.
The incident released toxic fumes and contaminated a drain pipe and the company was hit with cleanup costs and third-party claims for property damage and bodily injury of as much as $250,000, and another $75,000 in legal expenses.
Insurance carriers, however, have developed policies to help the industry, Belzak and Jovanovic said.
The policies can be changed to respond to losses by including coverage for raw materials and products applicable to the life sciences sector, the authors wrote. Or they can be redesigned to ensure coverage for microbial or radiological material used in research and development
"The most common environmental coverages purchased by life sciences entities are pollution liability policies and storage tank polices," Belzak and Jovanovic wrote. "Typical limits are in the range of $5 million to $10 million."
Limits can rise to $50 million, however, depending on the number of sites and the exposures being covered.
June 1, 2010
Copyright 2010© LRP Publications