The nature of biotechnology is to push the boundaries of innovation and imagination. Your work aims to provide solutions to many of the problems facing local and global communities including overpopulation, food insecurity, disease, climate change and more. As such, the work you do is inherently risky and sometimes controversial. Biotechnology company insurance is a necessary component of any biotech company’s risk-management strategy. We discuss some of the risks that biotech firms may be facing and how biotechnology insurance can address some of those risks below.
Quick Facts about the Biotech Industry in Canada
The following information is from BIOTECanada’s Policy Matters – Financing page:
- “It takes 10-15 years, and approximately 1.5 billion dollars to commercialize a biotechnology product.
- 80% of Canadian biotech companies are privately owned.
- The majority of the biotech industry sector is made up of SMEs: 50% of biotech companies have less than 20 employees, and 80 per cent have less than 100 employees.
- The biotech industry sector is typically more sensitive to market movements than other sectors.
- The top 25 publicly-traded biotechs in Canada have outpaced the TSX/S&P index since the global economic downturn begun.”(sic)
10 Strategic Business Risks Faced by Biotechnology Firms
Knowledge is power and knowing what risks your biotechnology company is exposed to is the first step in managing those risks. Science | Business identified the following challenges and risk factors that a typical biotechnology company faces:
- Pricing pressures and access
- Raising capital
- Strategic alliances
- Demonstrating value
- Drug development and clinical trials
- Regulatory compliance
- Monitoring drug safety
- Protecting intellectual property
- Accessing talent
- Harnessing emerging markets
While biotechnology company insurance isn’t a silver bullet that can protect your organization from all of the above risks, it can certainly act as a barrier to shield your company from potential losses and liabilities stemming from allegations of medical malpractice, non-compliance, consumer illness or injury, product recalls, allegations from shareholders of wrongdoing, intellectual property litigation and more. The right coverage may even help biotech startups attract boardroom talent. Further information on the coverages available as part of a biotech insurance plan is available in the following section.
Biotechnology Firm Insurance Coverages and Protections
Whether your biotechnology company belongs to the 50% of Canadian firms that employ less than 20 people, is part of the larger group that has over 20 staff but less than 100, or your biotechnology company is a large multinational, the coverages can be adjusted to meet your specific needs.
The following are some of the insurance policies typically included in a biotechnology company insurance plan:
Commercial General Liability Insurance for protection from litigation alleging bodily injury, property damage, false advertising and libel & slander. Your CGL policy can also be written to include protection through Product Liability Insurance.
Product Recall Insurance can cover your biotechnology company’s expenses if a recall is necessary including testing, lost profits, replacement costs, disposal fees and brand rehabilitation expense.
Pollution Liability Insurance can provide coverage for cleanup costs, regulatory fines and hearings/trials your biotechnology company may encounter.
Trademark / Intellectual Property Insurance can cover both allegations of trademark infringement and the costs to enforce your biotechnology company’s intellectual property rights.
Accounts Receivable Insurance can help protect you from losses in case receivables become uncollectable. This coverage is vital for biotech companies who do any business outside of Canada as coverage can include losses stemming from political or other unrest in countries you do business in.
Business Interruption Insurance covers loss of income resulting from a disaster scenario like a fire, flood, windstorm etc.
Errors and Omissions Insurance provides coverage for anyone who gives advice, makes educated recommendations, designs solutions, or represents the needs of others. Ex. biotech consultants, contract researchers etc.
Employment Practices Liability Insurance coverage is specifically designed to respond to specific employment exposures, such as breach of oral or written employment contract, discrimination, defamation, alleged wrongful, or employment-related misrepresentation
Cargo Insurance protects your biotech company’s shipments with comprehensive, door-to-door coverage.
Commercial Property Insurance can provide coverage for building or property damage and/or contents from perils such as fires, floods, sewage backups and more. We also recommend both Business Interruption coverage to help you with your operating costs after a named peril and Extra Expense coverage to help with the costs of setting up a temporary location so you can continue operations after an insured peril.
Boiler & Machinery Insurance / Equipment Breakdown Insurance can provide coverage for financial loss stemming from breakdowns of your biotech equipment, machinery and other equipment failures such as office and/or heating systems due to specific perils like electrical arching and others.
Cyber Liability & Privacy Insurance biotech companies present a lucrative target for hackers and cybercriminals. Cyber insurance coverage can help mitigate the damage caused by a breach.
Crime Insurance / Fidelity Insurance provides coverage for losses incurred due to employee theft or fraud.
Directors & Officers Liability / Board Insurance provides coverage for directors and officers from legal accusations of ‘wrongful acts’ and/or “breach of duty” made against the board and/or leadership team that are often brought by shareholders/investors. This coverage can be an effective recruiting tool as it shows potential leadership talent that you’re committed to their protection.
Commercial Auto Insurance / Commercial Vehicle Insurance for delivery vans, for example, and/or any other vehicles used by your biotechnology company during the course of business.
Get ALIGNED with Biotechnology Insurance Brokered by Commercial Insurance Specialists
Our brokers are not only commercial insurance specialists, we’re advocates too. We work with Canada’s top insurance companies to get your biotechnology company the insurance coverage it needs at competitive rates. Get a quote online or contact us to discuss your biotechnology company’s insurance needs.
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