Positive outlook for life science sector
The life science sector in Latin America is experiencing significant growth, particularly in pharmaceuticals and clinical trials. With a projected compound annual growth rate of 10% in the pharmaceutical sector since 2021 and a diverse population with improving healthcare infrastructure, Latin America is a hub for clinical trials for international trial sponsors.
This growth has been driven by an aging population that requires advanced healthcare. The Latin American life science market has expanded due to increased healthcare investment, regulatory improvements, a focus on local production, and advancements in technology that have helped to broaden treatment options.
From a regulatory standpoint, Latin American countries are progressively aligning their practices with international standards, including good clinical practice (GCP) and International Council for Harmonization (ICH) guidelines. This harmonization contributes to more efficient and expedited approval processes for new pharmaceuticals and medical devices, enhancing growth opportunities for their products domestically and internationally.
Despite challenges posed by the current geopolitical environment, strong global demand remains for pharmaceutical products, providing significant opportunities for the Latin American market. As life science companies begin to export outside of Latin America, their liabilities and potential exposures change, making insurance an essential part of risk management. Not having adequate insurance in place for these businesses can mean they could be financially responsible for any injuries or damage caused by their products, which can lead to substantial legal and medical expenses.
With the rising costs of litigation and settlements globally, it's crucial for these businesses to be aware of these exposures when entering the global market. This is why working with specialist life science insurance providers is critical to ensure companies in the sector have adequate protection for their exposures, globally.
The need for environment liability cover
This section was written by Olivia Hogan, senior underwriter – international casualty, at Markel.
The financial implications of an environmental incident can be devastating, and with evolving environmental regulations, stricter laws are being implemented to improve compliance across the board.
One of the immediate impacts of more stringent environmental regulations on businesses is the necessity for compliance and a reinforced commitment to environmental responsibilities. Consequently, insurance companies are prompted to adapt their risk assessment models to address the increased environmental risks associated with these regulations, such as the probability of non-compliance or accidental breaches. The evolving landscape of environmental laws has driven innovation within the insurance sector, where insurers are now creating products designed to cover these risks on behalf of policyholders.
While numerous environmental laws and statutes exist across Latin America, they're governed by the "polluter pays" principle: "Those who produce pollution should pay for the costs associated with damage caused." Brazil, for example, is globally recognized for its vast and rich biodiversity, and protecting these natural resources is at the forefront of the country's environmental policies. The polluter pays principle is embedded in various laws and regulations in Brazil aimed at preventing and mitigating environmental damage.
Companies operating in industries where significant environmental impact could occur (e.g., mining, oil and gas) are required to take out environmental liability insurance in certain countries across the region to mitigate risk associated with their activities.
In Mexico, for example, transporters of hazardous materials are required to have environmental insurance coverage that meets the standards set by the Mexican government. These should specifically cover the costs of cleanup and remediation of environmental contamination resulting from spills or leaks. Transporters must ensure their insurance policies comply with the requirements set, which involves working with insurance providers that are familiar with the specific needs and regulations related to the transport of hazardous materials. Non-compliance with these insurance requirements can result in fines and legal penalties.
Environmental liability insurance will provide financial protection against environmental damage, statutory liability, and onsite first-party clean-up costs, as well as off-site clean-up costs and third-party bodily injury and property damage.
The demand for innovative and comprehensive coverage solutions will continue to grow as regulations tighten on an international level. Therefore, having an insurance partner that can provide comprehensive and adaptive coverage that evolves in line with legislation is paramount, ensuring businesses and individuals are fully protected if an incident occurs.
