The insurance product offers tailored coverage by a separate insurance policy that can be bundled with other LSR insurance coverages.
Dietary supplement companies could previously receive coverage from Prop 65 via sub-limited coverage on a product liability policy offered by LSR, but that has a limit of $100K, explained Mike Garofalo, product development director for LSR. With the average Prop 65 settlement coming it between $80-90K there was a need for a, “separate policy with a separate set of limits with specific coverage dedicated to Prop 65,” Garofalo told us.
“In a thoughtful and procedural way we wanted to provide a transfer of risk to take away the obstacle of Prop 65,” he added.
The new coverage offers two limits: $500,000 or $1 million.
Prop 65 and the State of California
Prop 65, known officially as the Safe Drinking Water and Toxic Enforcement Act, is a California state law that mandates warnings on foods, dietary supplements, and other consumer products about exposures to certain substances, even at very low levels, when these are "known to the State of California" as carcinogens or reproductive toxins.
Prop 65 warnings are required for many chemicals that are commonly present in a wide variety of everyday products as well as for substances such as pesticides, gasoline, car exhaust, and cigarette smoke. As a result, warnings can be seen not only on product labels but also posted throughout California in restaurants, coffee shops, hotels, stores, buildings, parking garages and other locations.
LSR’s standalone Prop 65 coverage includes six chemical elements that may be found in dietary supplements and herbal products. LSR provides a full-service platform for this coverage, which includes client specific service, tailored coverage forms and collaborative risk assessment.
The Prop 65 coverage was developed in collaboration with Lloyd's syndicates who represent AM Best Security of "A+XV" and is distributed through select retail and wholesale brokers who recognize their client's risk in this evolving space. The new coverage offers a choice of limits and deductibles that can fit almost any budget.
“This coverage is available right now,” said Garofalo. “It’s live and we’re ready to do business.”
AHPA’s analytics
The insurance coverage was developed in part by using data from AHPA's comprehensive analytics on Prop 65 legal actions associated with herbal and dietary supplement products that informs association members about recent trends and helps them maintain compliance.
“AHPA members and the herbal and dietary supplement industries will benefit from this state-of-the-art insurance program and we appreciate LSR's work to develop and implement this program,” said AHPA President Michael McGuffin. “This insurance is especially valuable considering the significant attention to Prop 65. However, this insurance will never be a substitute for AHPA members' ongoing commitment to quality.”
Mark Wood, President of LifeScienceRisk, said: “I am thrilled to introduce this essential coverage to the dietary supplement industry. The team at LSR, with the aid of AHPA and Michael McGuffin, conducted extensive research to understand, develop and create a specialty insurance solution to meet an expressed need for our clients in this space.”
The coverage is available to all dietary supplement companies, and not just AHPA members.