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Life Sciences insurance marketplace realities

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September 30, 2020

In this publication we explore how insurance market conditions are impacting life science companies.

In Willis Towers Watson’s Insurance Marketplace Realities reports over the past 18 – 24 months, we have highlighted the growing challenges to buyers of insurance from a hardening market. The extent of the impact will vary depending on the business, its risk profile and its strategy for risk management. One thing that is clearer than ever is that certain industries are more deeply impacted by market conditions than others. In this publication we explore how market conditions are impacting life science companies.

For life science companies, the most challenged lines of insurance (i.e., those experiencing the most widespread price increases and capacity withdrawals) are D&O, property and cargo. In these classes especially, the insurance market is demonstrating unprecedented discipline. Buyers have already faced price increases and capacity reduction through 2019 and 2020, and we predict that rate hikes and capacity constrictions will continue throughout 2020 and 2021. On a positive note, product & professional liability in this space has proven immune to the blanket adverse market conditions, and there is a small but developing market for product recall for certain companies.

Naturally, the insurance markets have been severely impacted by the COVID-19 pandemic; the full extent of that impact is unknown presently. What is clear is that the pandemic and the resulting economic downturn will very likely extend the hard market through 2021. It may not expand it — rate increases for most lines may not increase further than they’ve been increasing for the past several months — but market discipline and upward rate pressure will continue as losses from the pandemic materialize and investment income deteriorates. Market conditions are driving many renewal negotiations down to the wire, but the work is getting done. In the life sciences arena, insurers are inundated with submissions for new business relating to the pandemic, whether it is clinical trials for tests, vaccinations or treatments or the volume of PPE manufacturers seeking product liability coverage. A constant theme throughout all lines of insurance in this report is to start renewal negotiations early and allow yourselves time for a longer and more detailed underwriting process.

Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed subsidiaries of Willis North America Inc., including Willis Towers Watson Northeast Inc. (in the United States) and Willis Canada, Inc.

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