Risks and insurance related to the distribution of the Covid-19 vaccine: questions and answers with Allianz specialists


As the distribution of the COVID-19 vaccine rolls out across the country, pharmaceutical industry insurers are able to share their experience on what constitutes a successful and safe distribution process.

Allianz Global Corporate & Specialty (AGCS) is an insurer with such extensive experience working with clients to ensure the safe transit of sensitive pharmaceutical products. Andy Simpson of Insurance Journal turned to AGCS to understand the logistics, risks and insurance involved in transporting vaccines. In the next Q&A segment Damon Finneran, Senior Allianz Marine Risk Consultant, and Brian McClintock, Pharma Global Practice Leader and Cargo AGCS, discuss the distribution process, some of the inherent risks, what commercial insurance covers, how CIOVID -19 Vaccine distribution differs from other pharmaceutical distributions and what the pharmaceutical insurance renewal market might look like.

What types of companies are your policyholders participating in the vaccination project?

Allianz Global Corporate & Specialty has a number of warranties in the pharmaceutical industry ranging from vaccine manufacturing to worldwide distribution.

What constitutes a successful vaccine distribution process? What are the specifics regarding the logistics and supply chain process of vaccine distribution? Which entities and which people are involved? When does your clients’ responsibility begin and when does it end?

In our mind, a successful vaccine delivery process begins with the transport of the raw materials – the active pharmaceutical ingredients (APIs) – that make up the vaccine to the point of injection in the individual receiving the dose of the vaccine. Our goal as an insurer of this cold chain from start to finish is not to have any product loss due to temperature deviations, security breaches or simply physical damage during transport.

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The logistics and supply chain process of a vaccine is important. This can involve multiple methods of transit and storage, ranging from specialized integrated transport providers who transport ultra-cold products that can be fragile in transit and require a narrow temperature range in which they are shipped before starting to ship. degrade the activity of the vaccine.

Other transit methods will include trucking in conjunction with air and with more stable vaccines, also by sea. All vaccine transit and packaging methods must be validated by a government agency (that is, the Food and Drug Administration here in the States) to preserve the cold chain from origin to destination. This is done through the use of several methods of transportation and packaging including envirotainers, temperature controlled trucks and containers and special packaging containing dry ice or cold packs depending on the temperature range. where the vaccine is to be shipped.

When our insured liability begins and ends depends on the circumstances. Most pharmaceutical manufacturers run the risk of losing raw materials when the finished vaccine is delivered to a distributor. The distributor then takes the risk of loss when distributing the last mile to the vaccination site. As we have learned with the Covid environment, circumstances can change quickly. As an example, the public / private partnership with the Covid vaccine has dramatically changed the norm in terms of who and when is at risk of loss.

What are some of the dangers inherent in transporting vaccines and how are insurers working with their customers to mitigate those risks?

The main concerns associated with the transport of vaccines are excursions (temperature variations) during transit. Our global loss prevention team works with our policyholders to minimize excursions during transit. We are having table discussions to identify contingency plans if things don’t go as planned during transit. Our Loss Prevention team makes themselves available at all times to work with our policyholders and brokers to “save” shipments that may fall out of their temperature specifications in the event of a transit delay.

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How does the distribution of the Covid-19 vaccine differ from other pharmaceutical distributions? What are some of the unique risks for insurers and clients due to the sheer size and scope of this project?

We are regularly involved in ultra-cold shipments, 2 to 8 degrees C and at room temperature, current Covid-19 shipments challenge us with their volume in conjunction with the pressure that the movement of vaccines will put on the temperature controlled transport industry. until the last mile distribution.

There are the usual vaccine storage, safety, security, timeliness, scheduling requirements that we are used to handling, short-term volume creates concerns not only with vaccine movement, but with all vaccine movement. other temperature-controlled goods in transit. , i.e. Covid test kits to bulk reagents, during this Covid period.

What does commercial insurance cover during this process and what does it not cover? How long should the deployment continue in a huge volume? How could insurance renewals be affected? Insurance cannot cover everything: what are the common exclusions or areas generally not covered (cyber)?

A standard ocean freight policy covers all risks of physical loss or damage from any external cause while the goods and / or goods are in the normal course of transit.

It is unclear how long the rollout is expected to continue in a huge volume

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We expect renewals of pharmaceutical type activities / accounts to be difficult in 2021. The ocean freight market is expected to continue to press for rate / premium increases and / or increased retentions and / or reduction in terms in the overall market, but pharmaceuticals and / or temperature-sensitive type commodities are expected to receive further consideration.

The standard freight policy contains both warranties implied and express in the policy, but some standard exclusions would be delay, loss of market, inherent defect, diversion and in the past year some companies have added a cyber exclusion approval as well as communicable disease. Exclusion clause.

A few years ago, when the market was very weak, brokers started to include the risk of delay (deterioration) in the policy as a covered risk and in this current environment, insurers are now looking to rule out delays again and / or to provide some type of sub-limit and annual aggregate.

Have customers sought additional coverage for this global vaccine rollout compared to normal distribution? Is additional coverage available?

Most of the global pharmaceutical customers and / or global logistics service providers and / or global medical distributors already have sufficient coverage in place in their programs. However, as more companies come online with an alternative vaccine and / or more companies become involved in distribution, we would expect policyholders to seek limits. and / or additional coverage due to vaccine deployment.

What is the biggest challenge with this distribution from an insurance point of view?

The biggest challenge is supply chain disruptions and / or the lack of powertrains / trailers / planes available to move that volume in a world that is currently not operating at 100% capacity.


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