A U.S. based distributor of a specialized pharmaceutical product was frustrated with the inability to obtain affordable Professional and General Liability Coverage. The client’s product was perceived by the traditional risk transfer market as very high risk; though it’s demonstrated loss history was very favorable. Limited conventional market interest resulted in a placement in the excess and surplus lines market.
Not fitting within customary underwriting “boxes”, the current pricing and coverage terms were not acceptable to the customer. In addition to being poorly priced with restrictive coverage, the carrier was not providing enough limits to justify the premium outlay. The client challenged their broker to seek a better way to: 1) solve its PL/GL coverage by finding expanded terms; and 2) get them out of the annual, bruising renewal negotiations each year and its unpredictable outcome on their long term budgeting. With no new insurance “players” in this space, the broker faced little success via established markets.
The broker approached Keystone Risk Partners (KRP) with this unusual exposure. After numerous discussions with the client and the broker it was collectively determined that it made little sense to structure a traditional annual policy susceptible to the usual market gyrations. First KRP crafted a customized insurance policy to meet the specifications of the buyer. Second, using their Bermuda subsidiary, KRP executed the placement of a custom designed, multiyear policy utilizing a sponsored captive facility. This alternative risk policy was structured with stable, predictable payments over 5 years combining an evolving blend of finite insurance, risk transfer and risk retention.