November 12, 2007 by Canadian Underwriter
Pharmaceutical insurers underwriting huge liabilities and risks in the United States are migrating to a much-friendlier climate in Canada, according to a report by A.M. Best.
Canadas feature attraction is that its legal environment is much more predictable than that of the United States when it comes to assessing medical liability risk, A.M. Best says.
For many carriers, the Canadian pharmaceutical industry, consisting mostly of smaller, less complex drug entities, presents the perfect opportunity to write products liability and clinical trial coverage in a legal environment with strict limitation on punitive damages and class actions, A.M. Best notes.
Canadas pharmaceutical industry does not have the same number of multinational companies worth many billions of dollars; instead, Canadian companies with revenues of between Cdn$50 million and Cdn$300 million dominate the field, A.M. Best notes.
In fact, Canadas two largest pharmaceutical companies, Apotex and Biovail, generate just over Cdn$1 billion in revenue per year. Because of this, well-established pharmaceutical underwriters in Canada, such as Zurich North America Canada, have seen increased competition from several Lloyds syndicates and U.S. carriers (CNA, for example) over the last year or two, A.M. Best continues.
The increased competition has brought with it lax terms in coverage and pricing, Urs Uhlmann, the senior vice president of Zurich North America Canada, told A.M. Best.
A lot of companies just dont seem to apply the same rules as we do when it comes to underwriting discipline and what we feel are products that have exposure that could create problem, he told A.M. Best.
He added this is the same mistake that got some U.S. insurers in trouble.
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