As part of our expanded coverage of our 2025 Pharma Sector Power Broker® winners and finalists, Risk & Insurance is interviewing carrier executives to get their take on the industry sectors covered by our Power Brokers. In this case, we spoke to 2024 Executive to Watch, Tory Agnich, chief underwriting officer, middle market life sciences for Liberty Mutual Insurance.

Risk & Insurance: Thanks for giving us some of your time today, Tory. As this conversation will align with profiles of our Pharma and Life Sciences Power Broker winners, would you please provide a primer on that sector of the economy?

Tory Agnich: The pharmaceutical and life sciences sector is definitely a dynamic and broad industry. It’s made up of pharmaceutical, biotech, medical device, digital health, and analytical and clinical labs.

One of the fastest-growing segments of the life sciences industry   is digital health, which harnesses digital technology to improve health care. These companies don’t deliver care to patients but rather, they are the innovators of devices or software that assist with health care outcomes.

R&I: What are some examples of the differentiation between telemedicine and digital health services, particularly in terms of startups gaining traction in this space?

TA: Telemedicine refers to delivering remote medical consultation via video or cell phone. It is a subset of the broader digital health segment, which includes a range of digital tools used in healthcare, such as wearable devices, mobile apps, and electronic health records.

There are significant examples in this space. Companies are creating new software using artificial intelligence (AI) or machine learning in diagnostics. These systems can interconnect with medical devices or instrumentation, capture information, perform data analysis, and provide information to the treating clinician. This technology can help organize the information or even suggest likely diagnoses to the clinician.

Imaging is another key area. While the human eye can see certain things, technology can analyze the pixels in these images to identify specific characteristics, such as those of tumors. The clinician can use this information as an additional input.

Wearables and sensors are also in this space, along with connected or wireless medical devices. Diabetes care is a prime example, where glucose monitoring systems can be remotely monitored and managed by medical professionals or diabetic care coaches with proper medical training and oversight.

R&I: Are healthcare professionals embracing these technologies?

TA: I think there’s an appreciation for innovation and support. But certainly, whatever your profession is, you went to school for that, had extra training for that, and developed your professional judgment. So, I think in general, healthcare professionals see these technologies as an asset that improves, empowers, and makes care more efficient and consistent. But it does not replace all that professional knowledge, experience, and judgment.

R&I: What are some emerging risks in the digital health space?

TA: Almost daily, companies are creating new digital health solutions involving artificial intelligence (AI), machine learning and other cutting-edge technologies

These solutions can offer wonderful potential benefits, but they can also come with potential risks.

Digital health is a brave new world, a complex and thriving industry. But by its very nature, it creates unique risks that should be strategically managed.

I think digital health users have their own risks, and the health care industry has specific concerns to look at.

Think about imaging technology.  While the human eye can see certain things, technology can analyze a body in much more detail to spot potential issues, such an emerging tumor.

The imaging system’s manufacturer clearly needs to protect itself against harm directly caused by its product. But in an increasingly complex and interconnected health care system, potential risks grow exponentially. What if there is a flaw in the image system’s software that enables a cyberattack that causes a medical provider to misdiagnose or improperly treat a patient?

From an insurance perspective, addressing these types of exposures brings some new challenges. For example, in traditional thinking, the software itself wouldn’t typically hurt people or cause physical damage to property. For software companies, the focus was often on the risks related to tech errors and omissions liability, where the software didn’t work correctly, and the company’s customer was relying on that software to do business, thereby suffering a financial loss from the product failure.

Today, we’re dealing with this expanded concept that software can be implicated in bodily injury scenarios and the product liability associated with software. That’s really a new area of thinking, of products liability and technology errors & omissions liability as both highly relevant for a software product.

When it comes to using this technology in the healthcare space, there’s also the interplay between the trained clinician and the supporting technology. At the time of a claim, we need to determine if it’s healthcare professional liability or product liability – and that matters. These have different legal theories, legal frameworks, statutes of limitations, and standards.

R&I: What are the most common types of claims seen in the pharmaceutical and life sciences industries?

TA: Across the Property and Casualty core insurance lines, the number one claim type is workers’ compensation. The causes are not unique to life sciences– we see slip and falls, repetitive strain injuries, and material handling incidents in warehouses and manufacturing facilities.

On the property side, water damage is typically the most frequent cause of loss in a portfolio – common for many industries. Second, would be spoilage from temperature changes, as these companies work with very susceptible materials. When these incidents occur, they can result in both physical loss or damage to covered property and consequential business income loss.

Particularly in the middle market space, product liability claims, which can include allegations of design flaws or manufacturing defects, tend to be more severity-driven than frequency-driven. Over the years, a company might not experience many claims, but when a claim does occur, it can be significant.

R&I: Are you seeing any spike or trend in the types of claims in the sector?

TA: Yes, I think there are several different trends emerging. The opioid epidemic spurred a lot of litigation related to that. There’s also a lot of focus right now on the reasonable use of Life Sciences products.  Lifestyle products including weight loss products are good examples, and the amount of and nature of direct-to-consumer advertising. New drugs can have a great deal of consumer interest and attention, plus all these different issues with supply chain, product shortage, and compounding risks. And celebrities can draw public attention to products, which can add an additional flavor to things.

I don’t think there are any material changes in terms of the core crux of product safety and efficacy. What is unique or trending more is legal system abuse and social and judicial inflation, where the plaintiff bar is positioned, and just the costs associated with these losses.

R&I: How are brokers adding value in analytics to risk management and risk transfer in the pharma/life sciences space?

TA: Brokers provide a great deal of value by working with their clients to put together comprehensive insurance programs. In this space, clients do the “rocket science”, and we partner with brokers to insure the risks associated with their science.

It’s about bringing all that information together to help clients understand the best use of their dollars and building insurance programs with appropriate limits for their exposures.   For life sciences companies specifically, they are usually very risk aware. It’s inherent to the life science sector – it’s a heavily regulated industry. Their products touch people, go into people, and are part of healthcare – it’s a high-stakes game.

Brokers, in partnership with carriers, leverage analytics and data to understand what’s going on in the Life Sciences ecosystem and community. I’ve found that life science companies are very interested in what their competitors or peers are experiencing in loss activity. So, bringing those insights and lessons from losses, understanding what made something harder to defend, or what it really looks like when there is a loss, is valuable.

I think the most important focus right now is determining the right coverage limits for a company. Brokers use analytics to understand those trends and costs to help make appropriate decisions for an insured. It’s about finding that right amount for their balance sheet and exposure, both in terms of what deductible or retention they keep and how much insurance they should be buying.

R&I: What attributes do you look for in a prospective insured or client?

TA: Companies that care about risk management and value insurance are a good fit for us. This is less of a commodity business – we really want to engage, understand their businesses, and put together customized, crafted programs.

I think that’s inherent for life sciences risks because these companies are so unique and specialized. We’re certainly looking at a company’s history with the FDA and their regulatory affairs strategy, recognizing that the exposures within that space are dynamic. The experience and attitude of the leadership team and the stability of staff are also important to consider.

Regarding staffing, a lot of disruptive activity can occur when a company loses a group of employees, especially in roles such as project management, customer service, and regulatory reporting.  So, we look at where turnover rates are high and where they’re healthy. Having a strong process for managing change is important because change is just a reality. Many losses come up because processes weren’t integrated appropriately into an organization’s operations. As a result, one seemingly small change that wasn’t articulated or shared the right way can cause significant issues.

Contract management is also crucial. When we look at losses and examine the actual contracts relevant to those specific situations, we try to uncover and understand how certain language was incorporated into agreements. We need to make sure there are strong contracts and that the right expertise is consulted on any changes and that appropriate terms are included.

R&I: What lines of insurance coverage are currently most challenging for life science and pharmaceutical companies to obtain?

TA: Generally, across most lines, capacity is available. Product liability is probably what most people see as potentially the toughest line, though currently, most brokers who specialize in this space would say there’s capacity. There have been some new entrants, albeit non-admitted carriers, who are interested in excess product liability on these towers.

Right now, I’m not hearing from brokers that they’re unable to find insurance in any line of business.

R&I: Beyond digital health, what emerging risks do you see in this space?

TA: I think legal system abuse is a significant concern, particularly regarding the cost of liabilities and what coverage needs to be purchased. With the changes in the US federal-level administration, we’re anticipating some potential changes, though it’s still early days.

Supply chain management is going to be relevant, especially considering the interplay of ingredients, components, and services. The Life Sciences industry tends to be a global community, and new tariffs may affect that flow – the ability to get what you need, have necessary redundancies, or handle contingent business interruption exposures for specific components.

I think the consensus is that M&A activity is going to be strong in the sector in 2025. There are periods where it ebbs and flows, creating new exposures, risks, and processes as companies evaluate their position – whether they’re being acquired or they’re the acquirer. This activity includes assessing the exposures, the insurance needed for those exposures, and how a company integrates new products or assets into their organization. &