Mind the Gap – Getting the Insurance Placement Right

1. 24th April 2008 Mind the Gap – Getting the Insurance Placement Right Christopher Bryce Industry Practice Leader Chemicals & Life Science - EMEA

2. Mind the GapAgenda • 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

3. Why are there so many liability covers? Public Liability Financial Loss Employers’ Liability Legal Expenses Employment Practices Liability Product Liability Medical Malpractice Professional Liability Directors & Officers Clinical Trials Liability Liability Covers

4. Different Liability Covers

5. 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

6. 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

7. 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

8. Case StudyTeGenero • 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

9. 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. Case StudyTeGenero

10. Case StudyTeGenero • 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/es-foi/documents/foidisclosure/con2031138.pdf

11. Case StudyClinical 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

12. Case StudyClinical 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

13. Case StudyClinical 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

14. Conflict of interest Breach of Contract Breach of Confidentiality Care Custody & Control Consent Regulatory Non-Compliance 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 High Impact Low Low Exposure High

15. The Process Exposures NEGLIGENCE REPORTING • ADVERSE EVENTS • NON-COMPLIANCE • SCIENTIFIC MISCONDUCT • Errors & Omissions/Public Liability/Medical Malpractice • RECOMMENDATIONS OF ETHICS COMMITTEE – Public Liability • OVERSIGHT – Public Liability SELECTION COMPLIANCE • PRIVACY • CONFLICT OF INTEREST • BILLING • Public Liability • UNDUE INFLUENCE • DISCRIMINATION • Employment Practices/Employers Liability

16. The Controls Exposures CARE, CUSTODY & CONTROL CONTRACT & CONFIDENTIALITY • INFRINGEMENT OF IP • BREACH OF CONTRACT • INAPROPRIATE DISCLOSURE • First & Third Party IP/Public Liability/Errors & Omissions • OTHERS PROPERTY • DAMAGE OR HARM Public Liability/Financial Loss SAFETY PROCEDURES COMPLIANCE • ASSESSMENT OF PROCESS • DOCUMENTATION • Public Liability • COMMUNICATION • EXISTENCE OF • PARTICIPANTS • Employers Liability/Public Liability/Clinical Trials

17. Evolution of Risk Management Driving a Good Deal Influence Cost of Programme Total cost of Risk Reduces Cost to Client Reduce costs outside of insurance transaction Marsh Resource

18. www.marsh.com