The UK life sciences sector is evolving at pace, bringing with it insurance challenges that many brokers are unprepared to meet – and many insurers seemingly can’t get a grasp of. Debbie Moss (pictured), a broker now leading life sciences at Verlingue UK, says the sector demands more than traditional cover. It requires insight, adaptability, and a willingness to ask better questions.
Moss began broking life sciences cover through Midlands-based clients experimenting with everything from molecular diagnostics to implantable devices. “You don’t need to understand the science as long as you understand what the risks are,” she said. “And of course, scientists understand what the risks are.”
She cited a business that moved from ceramics to medical devices: “They started off with devices that could go into joint replacement, for example, to help stabilise them, a bit like bone cement. But they've now developed that into a device that can directly apply antibiotics or anti-inflammatories to the joint rather than having to take them orally.”
But innovation can outpace insurers’ ability to respond. “It worries me how many companies are out there that don't have the right insurance because the industry in insurance doesn't have the expertise to do it,” Moss said. “I've seen examples on drug research where their business interruption is assured on a gross profit basis, and they're not making a profit. They're spending money.”
The rise of medtech and digital tools is shifting how science gets done. “Traditionally, most of the stuff was done in chemistry labs, wet labs,” Moss said. “These days, you can program computers to try and do a lot of the work for you.”
On artificial intelligence, she added: “ChatGPT, for example, can only give you an answer on the information that's already out there. It can't give you anything new.”
Brexit has added layers of compliance: “Instead of [previously] having just one regulation, you have to have separate different countries. What it ultimately results in is just more paperwork,” she said. “That could potentially stop further innovation or further expansion.”
Only a few insurers are positioned to respond well. “There are probably, in reality, only a handful of insurers who can write life science because they don't understand it,” Moss said. “I would hope that underwriters who are with a company that doesn't have a specific policy or doesn't understand it would decline to write it. I'm not sure that's the case.”
New biohubs and public funding are fuelling a wave of startups, many with minimal business experience. “A startup company, the scientists know about their molecules or whatever it is, devices, they don't always know about business,” Moss said. “They’ve only got four employees, [and don’t realise they] need employer's liability insurance. It's that basic sometimes.”
“You need to get under their skin to understand what they're actually doing, what they're launching and what they think the risks are,” she said. “Then you can say, OK, here's a list of insurance you should have, but given your financial constraints, just take the top three risks. That'll be different with everyone.”
Insurers are also experimenting with hiring scientists to address knowledge gaps, flipping the traditional model by training subject-matter experts in insurance rather than teaching underwriters the science. “That's a really novel way of looking [at the skills gap], ” Moss said.
Digital insurance models are also under discussion. “Some insurers that I've spoken to are starting to look at whether there is an easier solution to buy insurance. For example, a pre-packaged policy which includes everything you need at low level when you're a startup, and as it grows, the policy will change.”
Still, Moss is cautious: “I am slightly worried about that because I think life science is too niche, but anything that makes it easier for buyers of insurance is going to be definitely of interest.”
With new infrastructure and AI investment, Moss believes the sector will expand: “Microsoft has said they're going to invest millions, billions in AI for us and that will obviously have an impact on the life science sector as well.”
But the risks are evolving too. “We look at the risk management first. What can you do to mitigate these risks? Sometimes there isn't anything you can do,” she said. “Then you'd have to rebuild and start again.”
“If you're going to insure against something, make sure the limits are realistic. Because... they're not going to sue you for half a million, they're going to sue you for 50 million.”
“The way good brokers approach anything is look at the risk management first,” Moss added. “That's why... in the life science field, it's more complex because of the intricacies of the sector, which is why you need to understand it properly.”
As innovation continues to accelerate, Moss believes the industry’s challenge is clear: keep pace with the science, or risk being left behind.
