24th April 2008
Mind the Gap –
Getting the Insurance Placement
Right
Christopher Bryce
Industry Practice Leader Chemicals
& Life Science - EMEA
www.marsh.com
Mind the Gap
Agenda
 Why do we have so many different liability covers?
 Avoiding the Gaps
 Case Studies
 What should be disclosed to your broker?
 Risk Strategies – Identification of Exposures
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Liability Covers
Public
Liability
Financial
Loss
Employers’
Liability
Employment
Practices
Liability
Why are there so
Legal
Expenses
many liability covers?
Product
Liability
Medical
Malpractice
Professional
Liability
Directors &
Officers
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Clinical
Trials
Liability
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Different Liability Covers
Directors & Officers
Liability
Professional Indemnity or
Errors & Omissions
Employment Practices
Liability
Public Liability
Mismanagement or wrongful
acts in operating an
organisation
Negligent advice or services
Employment disputes and
personal grievances
Damage to the person or
property of others caused by
an organisation’s negligent
act or omission
Products Liability
Employers Liability
Medical Malpractice
Clinical Trials
When products produced or
sold by an organisation
cause damage or loss to
third parties.
Injuries sustained to
employees out of and in the
course of their employment.
Improper or negligent
treatment of a person under a
medical professional's care,
which results in injury or
death.
Bodily injury attributable to
participation in a Clinical Trial
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Avoiding Gaps in Liability Policy
 Material Facts – duty to disclose
‘Every circumstance is material which would influence the judgement of
a prudent insurer in fixing the premium or determining whether he or she will take the
Risk’.
The legal definition of a material fact is contained in the Marine Insurance Act 1906:
 Structure of Insurance Contracts
– Operative Clause
– Definitions
– Exclusions
– General Conditions
 Supporting documents
– Use of Confidentiality Agreements
 Presentation
– Three way partnership should be the objective
– Transparency
– The facts presented reflect the risk now not the past
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Avoiding Gaps between Liability Policies
 Construction project to build an extension to an existing building all
occupied by the Principal
 A number of policies would apply
– Public Liability
– Employers Liability
– Construction Liability (i.e., removal or weakening of support)
 Key areas of focus:
– Contract conditions
– Understanding of responsibilities
– Definitions; use of consistent policy language
– Protection of the Principals position
– Understand relevance of exclusions and their applicability
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Avoiding Gaps between Liability Policies
 Clinical Trial involving new drug
 A number of policies would apply
– Public Liability
– Employers Liability
– Professional Indemnity/Errors & Omissions
– Medical Malpractice
– Clinical Trials
 Clinical Trials are potentially high-risk particularly if they go wrong
 The insurance protection put in place needs to be carefully studied to
ensure that it is aligned to the different exposures and liabilities that exist
as there are a number of parties to the trial all of whom have different
interests
•Avoiding Gaps in Clinical Trials
Liability Insurance, G.Carlson, 1999,
www.devicelink.com
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Case Study
TeGenero
 The parties
– Contract Research Organisation
– Sponsor
– Manufacturer (of the compound)
– GLP Studies ( a laboratory)
– Eight participants in the trial
 Phase 1 study – “first in man study”
 Of the eight six experienced a serious adverse reaction
MHRA Investigation into Serious Adverse
Event during trial of TGN 1412
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Case Study
TeGenero
Parexel – TGN 1421
 Mr Wilson and five others who took part in the TGN 1421 trial look to receive
6 figure payouts.
 It is reported that Parexel, the U.S clinical trial group who conducted the
trials are willing to meet a shortfall between the £2million insurance policy
and the claims (around £4million)
 Ryan Wilson, 21, had to have all his toes amputated and the tips of several
fingers removed.
 Of the six men who took part, Mr Wilson was the worst injured: his body
swelled to three times its usual size and he was in a coma for two-and-a-half
weeks.
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Case Study
TeGenero
 Parexel did not ensure that there was insurance coverage to protect the
participants; they had a duty to review Sponsor’s insurance policy
– The insurance policy did not contain exclusions that would impact on the
payment to the volunteers
 The policy was a no-fault compensation policy - compensation should be paid
regardless of whether the subject is able to prove that the company has been
negligent (ABPI)
 Failure in procedure?
– No evidence to suggest that appropriate care was not given
– A 24hr on-call rota in place for medics and telephone system that would
divert out-of hours
– However, there was no formal written procedure for the process and
the process had never been tested
* MHRA Response to Questions,
http://www.mhra.gov.uk/home/groups/esfoi/documents/foidisclosure/con2031138.pdf
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Case Study
Clinical Trial of a supplement
 The parties
– University
– Sponsor
– Manufacturer (of the compound)
– GLP Studies ( a laboratory)
 In excess of 100 participants in the trial
 Mothers & children under 5 years of age
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Case Study
Clinical Trial of a supplement
 Insurance Cover – Clinical Trials
– No fault (ABPI Guidelines)
– Claims Made wording; run-off cover?
– Extended Discovery Period
– Limit of Liability in relation to number of participants
– Medical Malpractice excluded
– Costs in addition
 Title of the Insured
– Aggregate limit
 Territorial Limits
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Case Study
Clinical Trial of a supplement
 Supporting documentation
– Evidence of hold harmless & indemnification from other commercial
partners
– Copies of Informed Consent outstanding; seen by Insurers
– Indemnification provisions
 Has the University sought information on the extent of insurance held
by other participants to trial?
 Who is participating in the trial and what is their expectation of
jurisdiction (Does Informed Consent deal with this)
 Serial trialists
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Risk Strategy & Identification of Exposures
• What are the good controls?
• How robust are they?
• How would they respond to a major event?
• Prioritise your risk issues and solutions and improve your resiliency to current and future
risks
Cost drivers
Impact and exposure to loss (for example)
Improper Management of Research Subjects
Improper inducements to ‘volunteers’
Absence of Clinical Trials Safety Plan
Research Subject Safety
Conflict of interest
Care Custody & Control
Consent
High
Impact
Low
Regulatory Non-Compliance
Breach of Contract
Breach of Confidentiality
Low Exposure High
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The Process Exposures
NEGLIGENCE
• RECOMMENDATIONS OF
ETHICS COMMITTEE –
Public Liability
• OVERSIGHT – Public
Liability
SELECTION
REPORTING
•
ADVERSE EVENTS
•
NON-COMPLIANCE
•
SCIENTIFIC MISCONDUCT
Errors & Omissions/Public
Liability/Medical Malpractice
COMPLIANCE
• UNDUE INFLUENCE
• PRIVACY
• DISCRIMINATION
• CONFLICT OF INTEREST
Employment Practices/Employers
Liability
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• BILLING
Public Liability
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The Controls Exposures
CARE, CUSTODY & CONTROL
CONTRACT & CONFIDENTIALITY
• OTHERS PROPERTY
•
INFRINGEMENT OF IP
• DAMAGE OR HARM
Public Liability/Financial
Loss
•
BREACH OF CONTRACT
•
INAPROPRIATE DISCLOSURE
SAFETY PROCEDURES
First & Third Party IP/Public Liability/Errors &
Omissions
COMPLIANCE
• COMMUNICATION
• ASSESSMENT OF PROCESS
• EXISTENCE OF
• DOCUMENTATION
• PARTICIPANTS
Public Liability
Employers Liability/Public
Liability/Clinical Trials
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Evolution of Risk Management
Cost to Client
Driving a Good
Deal
Total cost of Risk
Reduces
Influence Cost
of Programme
Reduce costs
outside of
insurance
transaction
Marsh Resource
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