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Article: Product recall insurance scarce for pharmaceutical companies; Alternative market the only option for large organizations.(Sector Briefing: Pharmaceuticals)
- Article from:
- Business Insurance
- Article date:
- December 18, 2006
- Author:
CopyrightCOPYRIGHT 2006 Crain Communications, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Byline: MICHAEL BRADFORD
Large pharmaceutical companies in need of insurance to cover the cost of product recalls have no options in the traditional market.
Needing a line of coverage made extinct by heavy losses and underwriting mistakes, large drug companies are forced to fund the product recall risk in captives or other alternative market vehicles, or simply assume the expense of a recall as a cost of doing business.
Smaller risks-pharmaceutical companies with sales of less than around $10 billion-have a somewhat easier time finding recall coverage. But those policyholders can turn to just a handful of insurers that are writing the coverage ...