3 Ways Life Sciences Companies Can Reduce the Non-Insurance Costs of Product Liability Claims
Product liability claims in the life sciences industry are unique. In many cases, the products in question make a direct impact on consumers’ health. When they don’t perform as intended or cause an injury, the consequences can be severe. Especially in the context of social inflation, product liability claims can potentially cost life sciences companies millions.
What many in the industry don’t realize is that a portion of these costs can’t be recouped from a product liability policy.
“These unexpected costs can be categorized as immediate or deferred costs. Immediate costs would include additional legal costs to respond to heightened regulatory scrutiny incurred after a claim. It also includes losses absorbed in attempts to restore reputation. Companies may need to offer discounts or refunds, for example, to retain existing business, which may not be reimbursable damages under a customary insurance policy,” said Tom Morelli, Claims Representative in The Hartford’s Major Case Unit.
“Deferred costs could include loss of market share and increased insurance premiums that result from a more significant loss history and deteriorated risk profile. Training costs may also increase as companies try to prevent similar claims from happening in the future.”
Fortunately, life sciences companies can reduce or avoid these costs by implementing a few proactive risk mitigation strategies.
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