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Insurers, pharmaceutical manufacturers sail into the unknown with vaccine expansion



(Reuters) – Rapid global delivery of COVID-19 vaccines by air and sea in extremely cold conditions will lead to an increase in the rate of freight insurance and stimulate demand for new coverage areas and leave insurers on high alert. [19659002] Pharmaceutical companies normally manage the risks of transporting their products by purchasing insurance or relying on an internal insurance company, an insurer in prison.

However, as Pfizer Inc. and other drug manufacturers begin rolling out vaccines more widely, existing company-wide annual cargo insurance programs are likely to be inadequate, industry sources say.

"Where manufacturers or logistics providers see gaps in their coverage, they can look to insurance markets to stop those gaps," says Charlie Netherton of broker Marsh. [1

9659002] The first US vaccine shipments left Pfizer's facility in Kalamazoo, Michigan, this week, while tens of thousands of people in the UK received their first dose of the Pfizer vaccine, developed with Germany's BioNTech.

Modern Inc. will also roll out a COVID-19 vaccine once regulatory approval is secured, as will the UK's AstraZeneca, which has developed a vaccine with Oxford University.

However, shipments of vaccines are already at high risk, with about 30% of vaccine shipments globally lost due to damage or theft, insurance sources say.

Prices of new contracts in the transport insurance market climbed sharply even before the pandemic after increasing demands and reduced competition and industry sources expect insurance rates to jump when pharmaceutical companies involved in COVID-19 vaccines renew their annual insurance next year, given the additional risk. to 20% compared to the previous year, says Reiner Heiken, CEO of the US headquarters Hellmann Worldwide Logistics.

These companies are also expected to take out more coverage for increased risks including extra cold transportation and increased likelihood of cyber attacks or old-fashioned theft, sources say.

To reduce their insurance costs, pharmaceutical companies are likely to take more of the initial risk themselves, or take advantage of more in-house prisoners, which have become increasingly popular in large companies.

Pfizer, Moderna and AstraZeneca immediately responded to requests for comment via email.

Disappears

Insurers, on the other hand, also risk claims under liability policy if the vaccines are administered after being damaged during transport and cause major side effects, says Nicky Stokes, at the broker New Dawn Risk.

A shipment of tens of thousands of packages of a COVID-19 vaccine that is lost, stolen or damaged from a truck or refrigerated container has an estimated value of $ 15 million – $ 50 million, industry sources say. $ 563 million last year, said the International Union of Marine Insurance.

The US and British governments have said they will take responsibility if the vaccines cause side effects, but it is not clear if it includes side effects caused by damage in

Any losses in the transport of vaccines would go beyond more than $ 100 billion due to the pandemic that Lloyd & # 39; s London predicted this year across a range of insurance classes.

Transport of the vaccine with the first movers like Pfizer requires constant conditions of -70 degrees Celsius (-94 Fahrenheit). The monitoring will be complex on a large scale.

If the vaccines "extend beyond their optimal temperature range for a certain period of time, regulators will consider them spoiled and unsuitable for consumption, which for insured or insurers would mean a loss," said Mel Buitendag, with broker Arthur J. Gallagher & Co. .

The vaccine has so far been transported by air.

However, AP Moller Maersk, the world's number 1 container shipping company, said it has an agreement with COVAXX, a division of the US private group United Biomedical, to move the vaccine in specially cooled freezer containers.

"Air freight transports are already underway", says Maersk Global, Head of Pharmaceuticals Hristo Petkov. "For sea volumes, we are looking at the end of the second quarter and the beginning of the third quarter."

COVAXX CEO Mei Mei Hu told Reuters that it partnered with Maersk to secure comprehensive freight insurance for the full value of each shipment.

"The greatest common risk of temperature-controlled cargo being transported either by sea or air is at the point of transition to the last mile – between the sea and the hinterland or the air and the hinterland," Hu said.

"Any crossing point may impose additional handling, changes in the power supply or delays in customs clearance which may threaten the integrity of the transport."

Vaccines are likely to need advanced tracking and even armed escorts, says Gallagher's wife Buitendag.

Cargo insurance usually eliminates cyberattacks, so drug companies usually buy extra coverage worldwide. to require unparalleled data connection, says Kevin Rimmer, cargo manager at broker McGill and Partners.

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