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Leading the way in the life sciences market

Ryan Specialty Group's new MGU brings capacity and expertise to this challenging space

By Elisabeth Boone, CPCU

In the world of niche marketing, when the going gets tough, Ryan Specialty Group gets going. Since it was established in 2010 by Aon founder Patrick Ryan, RSG has built an impressive stable of MGAs, MGUs, and wholesale brokerage facilities to address an array of challenging exposures, from cyber liability and renewable energy to public entities and complex construction risks.

Launched in June 2011, LifeScienceRisk exemplifies Ryan's zest for rising to a new challenge. Based in Minneapolis and headed by a veteran specialty underwriter, LSR is a managing general underwriter that specializes in targeted segments of the life sciences industry. The facility places general liability or monoline products liability for manufacturers, repackers, distributors, and importers of generic pharmaceuticals, nutritional supplements, and medical devices.

LifeScienceRisk is a unit of RSG Underwriting Managers LLC, a subsidiary of Ryan Specialty Group, that provides underwriting management and other services to insurers whose products are distributed through agents and brokers. The MGU works with appointed retail and wholesale producers who have expertise in the life sciences area.

Serving as president and chief executive officer of LifeScienceRisk is Mark D. Wood, CPCU, ARM, who has over 30 years' experience in health care and life sciences underwriting and loss control and has held senior management positions with major carriers. Most recently he was vice president of underwriting for CNA's Advanced Medical Technology unit. Throughout his career, Wood has focused on underwriting medical professional, medical products liability, and E&O liability. Further enhancing his background are degrees in nursing and health care administration.

In addition to a high level of skill and experience, Wood brings to his position an attribute that is highly prized by Patrick Ryan: a passion for the industry he serves.

"I love the life sciences industry," Wood says. "It's highly entrepreneurial, and the people who are at the core of the industry are dedicated to improving public health as well as earning a profit. There's huge demand for quality health care products around the world, so the industry is experiencing strong growth and will continue to do so," he asserts. "The companies I serve are stable and are in the business to stay."

Challenges of growth

As the life sciences industry evolves, Wood remarks, it faces challenges on a number of fronts. "These companies are heavily regulated. They have to prove to the FDA and other agencies that their products are safe and effective, and that is expensive." As with any regulated industry, he observes, "Companies in the life sciences sector want to innovate so they can compete and build market share. They have to balance the cost of investing in innovation with the costs involved in regulatory compliance."

Unlike prescription and generic pharmaceuticals, Wood explains, nutritional supplements are regulated by the FDA as foods rather than drugs, except if a manufacturer makes a health-related claim that would cause the FDA to evaluate the product based on its standards for pharmaceuticals.

"The FDA monitors the advertisements for nutritional supplements to make sure they do not contain claims that would cause the product to fall under pharmaceutical standards," Wood says. "The FDA also periodically tests these products to ensure that they don't contain active ingredients that would place them in the category of pharmaceuticals. If the FDA finds that a nutritional supplement contains an undisclosed pharmaceutical ingredient, it will recall the product.

"The manufacturers of supplements have to walk a fine line," Wood observes. "They encourage people to buy their products by appealing to their desire to be healthy, and at the same time they must ensure that they can back up any health-related claim that appears in their advertisements and on labels."

Another cost pressure on the manufacturers and distributors of life sciences products, Wood explains, is exerted by a fundamental market dynamic. "People have high expectations about the quality of products and service, but they don't want to pay a lot for it. To meet consumer expectations while earning a reasonable profit, companies are making significant investments to improve efficiency."

Economic pressures not only are compelling manufacturers to become more efficient, Wood remarks, but also are driving a trend toward consolidation. "As underwriters, we're looking at an industry that's extremely dynamic, with new players coming into the market at the bottom, while at the top there's a huge amount of consolidation," he says. "A client of ours may acquire another company, or it may itself be acquired. Consolidation in the life sciences industry is one of the biggest competitive challenges for insurance providers, because the industry is growing through acquisition rather than growing organically."

Speaking of competition, it abounds in the insurance market for life science-related risks. LifeScienceRisk joins a cadre of players that includes ACE USA, W.R. Berkley, Chubb, Marsh and Allied World, Navigators, and Worldwide Facilities. Competition and challenges notwithstanding, Wood comments, "Life sciences is an exciting, dynamic industry with virtually unlimited growth potential."

Differentiation is key

Renowned for setting high standards in specialty marketing, Patrick Ryan enters a new arena only after he has thoroughly studied the market and is confident that his team can bring to it what he calls "differentiating creativity and differentiating expertise." We asked Wood how LifeScienceRisk embodies that principle in its philosophy and operation.

"Within the life science community, I think our underwriting facility truly does embody this ideal," Wood responds. "We are precisely focused on providing coverages that address the product liability exposures of customers in our target market segments. We also are committed to being a partner with our insureds in efforts to mitigate their loss exposures. LifeScienceRisk is well positioned to provide that kind of consultative support along with the insurance solutions provided by our carrier partners," Wood remarks. "As we grow our facility, we will bring differentiating creativity and expertise to the market by building a team of underwriters who analyze each account and identify its specific issues and concerns, then devise strategies for effectively managing those risks."

Just as Patrick Ryan and his team thrive on the challenges of tackling tough risks, they are committed to providing a streamlined platform for producers who do business with their specialty units.

LifeScienceRisk underwrites both primary and excess layers, so producers have a single point of access for their placements. The MGU has established standards to ensure timely underwriting review and response, quoting, policy issuance, and endorsement processing.

Commercial general liability and monoline products are available, as well as straight excess liability over a deductible or self-insured retention. The minimum attachment point for manufacturing accounts is $10,000. Limits can be written up to $10 million per account. Coverages are placed with carriers rated A or better by A.M. Best and can be written on a nonadmitted basis in all states. Non-U.S. manufacturers are not eligible, but coverage is available for the foreign operations of U.S.-based manufacturers.

Competitive edge

As noted earlier, the insurance market for life science-related risks is robust, with numerous players competing for business. How does LifeScienceRisk seek to differentiate itself in a crowded field?

"Some of the established competitors in this space provide a high level of service and have a track record of being consistent in the marketplace," Wood acknowledges. "I see an advantage for our facility because life science business is all we do, so I'm able to focus all my energy on maintaining stable capacity for the risks we target. That gives us a significant edge in the market and, equally important, works to the benefit of our insureds as well as our underwriting and producer partners."

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