Because Replacement Coverage Does Have Limits
Your buildings can be your largest investments, so it's smart to insure them at their replacement cost value.  But sometimes even that isn't enough protection.  Because of changing laws, you may have to pay costs to rebuild that you aren't aware of until it's too late.  That's a future expense and worry you can avoid by adding Building Laws Safeguard coverage.

The Cost of Meeting New Ordinances and Laws Adds Up
Local ordinance and zoning laws may have changed since your building was constructed.  Some now require even undamaged parts of a building to be torn down after a partial loss.  This loss to the undamaged portion wouldn't be covered under a replacement cost policy.  Neither would the demolition costs.

Federal laws, such as the Americans with Disabilities Act, may have been enacted since your building went up too.  After a loss, you might have to upgrade your building by:

• Installing handicap restroom facilities
• Altering an entrance for handicap access

Replacement cost coverage wouldn't cover these upgrades either, unless they were already an existing part of the building.

Building Laws Safeguard Coverage Prevents Expensive Surprises
When you've suffered a loss, the last thing you need to hear is that your replacement cost coverage may not cover your rebuilding costs.  Protect your building investment now by adding Building Laws Safeguard Coverage to your policy. This will supplement your replacement cost coverage.  You can select an amount of insurance from $50,000 to $250,000 that best suits your needs, which will help pay for:

• Loss involving the undamaged portion of your building
• Demolition costs
• Building upgrades to meet current building codes

Is your work insured?
Contractors face out-of-pocket financial loss because of the potential to suffer property damage to your products and your work caused by faulty workmanship, materials, or design.

• A plumbing contractor completes a $20,000 job on a new building.  After it is occupied, an explosion and fire levels the building.  The cause was the contractor's faulty fuel hook-up to the boiler.
• An HVAC contractor completed a $35,000 job on a renovated building.  The building owner sued the named insured for installing the air-conditioning system incorrectly.

In both of the above cases, we offer Contractors Errors and Omissions Coverage that would protect against damage to the named insured's product or work after the customer has taken possession of the property.

• A contractor designs and installs the electrical work for a new store.  Wiring is laid under the concrete ground floor.  The store owner later finds that the wiring is not adequate to handle the power load.  The store owner sues the named insured.

Our available Contractors E&O protects against claims seeking monetary awards for the named insured's failure to perform the job according to specifications.

Most general liability policies exclude coverage under such all-too-common scenarios.  Our Contractors E&O coverage provides valuable additional coverage for your exposure to financial loss.

Your dental practice is your livelihood, so you recognize the importance of carefully analyzing your risks before you commit to insurance protection.
Al Purmort Insurance can help protect you from financial loss while you concentrate on operating your business and taking care of your patients.

Features that keep you smiling
Our Dentist's Package Policy goes well beyond where ordinary insurance policies end.  Our flexible policies grow as your practice grows, offering coverage options that give you more protection and more value for your money.

Professional liability on an occurrence basis covers work you performed during the policy period, no matter how much time passes before a claims is made.  You also have the option to include your temporary substitute dentists.

Business liability defends and pays general liability claims against you up to $1 million for each occurrence.**  If one of your patients falls or if employees use their own cars on your behalf, your policy safeguards your business assets.

Building and business personal property pays you for specific loss to your property, including items unique to your profession:

• Patient x-rays and records.
• Valuable metals.
• Personal property sent off premises and much more.

Professional Protection When You Need It
If you want one of the most complete professional liability programs on the market, you've come to the right place.  Our policy covers you on an occurrence basis, which is far superior to claims-made coverage.

What's the big difference?  Occurrence coverage protects you against claims arising out of work you perform during the term of your policy.  You're covered even if a claim is made later (after your policy expires or you retire).

If you are transitioning from a claims-made policy, we can even provide prior acts coverage to give you continuous protection.

Your Superior Professional Liability Coverage Doesn't Stop There
At Al Purmort Insurance, we understand that your reputation and business are vitally important to you.  That's why provide this policy which:

• Settle claims only with your consent.
• Extend coverage to include your corporation or partnership members against the acts or omissions of others.
• Extend coverage to include employed and independent contractor hygienists or dental assistants, with separate limits, at no additional cost.
• Offer optional coverage for your temporary substitute dentists.
• Give you an option to cover dentists taking State Dental Board Exams
• Provide $25,000 of legal fees when you appear before a state regulatory board.
• Reimburse you up to $50,000 of legal fees used to defend you in a civil suit alleging the improper disposal of medical waste.
• Pay you up to $500 per day for loss of earnings if you testify or appear in court, in defense of a claim, at our request.

That's not all.  Our property coverage gives you even more to smile about.

Safeguard Your Office and Your Specialized Equipment
Your office building, specialized equipment and improvements you've made are probably your business's most valuable physical assts.  With our package policy, you'll receive coverage for:

• Improvements you've made to your property.
• Leased property improvements you have agreed to insure.
• Completed additions.
• Building glass.
• Outdoor fixtures such as light poles and mailboxes.
• Permanently installed machinery, equipment, signs and floor coverings.

You get this coverage plus coverage for property important to your business.

You can count on us to grow with you
Over time, your insurance needs change as your practice changes.  We are dedicated to work for you and can increase many of the following special coverages that are automatically included in your policy:

• Gold and silver used in your practice up to $3000.
• Theft of money inside your office or office safe up to $10,000.**
• Money lost on the way to the bank or stolen from the night depository up to $2,500.**
• Employee dishonesty for thefts up to $10,000.**
• Accounts receivable up to $100,000.**
• Your business personal property against damage caused by earthquakes and floods.*
• Property in transit or off premises up to $25,000.**
• Valuable papers, including x-rays on premises up to $100,000 or away from your office up to $25,000.**
• Computer equipment and software up to $10,000.**
• Building coverage extended up to $25,000 for clean up after water back up of sewer, drains, or sumps.*
• Valued daily loss of income up to $500 per day (up to 30 days), including excess over the valued daily loss for actual documented loss sustained (up to 12 months).
• Loss of business income due to a temporary halt of off-premises power and water supply services after the first 24 hours when the suspension is caused by a covered cause of loss.

Additional Coverage for Unexpected Expenses
Not all property coverage is the same.  With this Dentist's Package you get exceptional value for your money.  If there is a covered loss to your property, beyond simply repairing or replacing your damaged property, your policy covers additional expenses:

• To remove leftover debris, you have up to $25,000 of coverage.
• To replace or remove damaged trees or shrubs, up to $10,000, with a maximum of $1,000 per tree or shrub.
• To repair or replace special signs, up to $10,000.
• To pay for fire department service charges, up to $10,000.

Unique, Customized Options
Sudden and accidental breakdown of your medical, mechanical and electrical equipment can result in extensive repairs, bringing your business to a grinding halt.  You can add our Equipment Breakdown Coverage to protect your covered equipment by paying for repairs caused by a covered cause of loss.

The Blanket Basket Endorsement provides up to $150,000 blanket limit above base limits for your accounts receivable, data processing equipment, debris removal, valuable papers and water back up of sewers, drains, or sumps.  You can add this important optional coverage to your policy.

Round Out Your Financial Protection
Our professional and personal umbrella liability coverage gives you additional coverage to safeguard you and your business against catastrophic loss.   Given today's legal environment, an additional layer of protection further insured your financial well being.

Employment practices liability coverage offers affordable protection from suits brought against you by employees because of your hiring, firing, promoting, or other employment practices.

Life insurance provides income replacement and retirement planning opportunities.  We can help you:

• Fund a plan to continue your business if you become disabled.
• Protect your family and ensure your estate's liquidity.
• Fund a non-qualified retirement plan.

Your established practice may even qualify you for our convenient equipment leasing and financing.

Lock In Rates For Three Years
It's a lot easier to project expenses and save time when you can determine costs ahead of time.  Cincinnati Insurance will do what most other insurance companies refuse to do - issue three-year policies at rates guaranteed not to increase for the entire policy terms (except for professional liability).*

 * Available in most states.
**You can customize your policy with higher coverage amounts.

Why You Need Employment Practices Liability Insurance for your business

Even small companies can be at risk.  Many owners think of their employees as family, but it only takes on infraction against complicated employment laws to trigger charges.  One employee who is passed over for promotion, reassigned, or reviewed may feel discriminated against.  The Equal Employment Opportunity Commission (EEOC) and related state agencies received 150,733 charges during 1997, and that number doesn't include the thousands of state, local, and "common law" claims made (1).  From 1991 to 1997, the number of sexual harassment charges filed with the EEOC escalated 232% nationwide (1).

While the number of suits continues to rise, plaintiffs' awards climb even higher.  The median compensatory award figure in 1996 was 46% higher than 1995 and 230% higher than 1999.  In 1997, the recovery rate for a wrongful termination suit was nearly 60% (2).  That means the plaintiff won more than half the time, and those losses came with quite a price.  In 1996, the median compensatory award for a wrongful termination claim was $299,372 (2).  To put that in perspective, a 1996 survey revealed that half of all the small business polled would have to shut down if they lost $250,000 in court (3).

Perhaps the most distressing figure is the cost of defense.  To answer even a groundless EEOC complaint, the defense can cost you between $7,500 and $15,000.  This does not reflect the much greater defense attorney fees for unsuccessfully defending a case in court which can exceed $150,000 (4).

Take a moment to do the math.  Employees are suing their companies.  Many are winning.  The compensatory awards are already large and still growing.  Regardless of a win or loss, the cost to defend yourself is an unbudgeted expense and may not be payable, depending on your company's bank account.

Be prepared.  You can take control of the situation by making sure your business has adequate protection for this exposure to financial loss.  Other types of business policies are designed to protect your Company from outsiders' claims, not your own employees.

Fortunately, protecting yourself is easy and now affordable with Employment Practices Liability Insurance from Al Purmort Insurance Agency.  To get started, contact our offices today.

(1) Equal Employment Opportunity Commission
(2) 1996 Jury Verdict Research, Horsham, PA
(3) Cincinnati Enquirer
(4) Employment Alert

You have come to the right place if you:

• Have merged with another company.
• Acquired another another company.
• Plan a corporate merger or acquisition.

Acquiring or merging with another company can bring with it the risk of environmental liabilities. A new owner can be held responsible for environmental liabilities connected with the original company's previous or ongoing operations. Sometimes liabilities are known or can be estimated at the time of merger or acquisition but there are many times when the risk isn't known or can't be anticipated, and is revealed only after new ownership ensues.

Today, buying environmental insurance has become as customary as acquiring general liability insurance. Most commercial general liability policies still contain an absolute pollution exclusion, so environmental expenses are excluded from coverage. For anyone involved in corporate mergers and acquisitions, the reasons for buying environmental insurance impairment and cleanup cost-cap insurance are many, including:

• Concern that the Phase I environmental assessments fail to identify all environmental issues. Some estimates suggest that these oversights occur in as many as one-fourth of Phase I reports.
• To protect shareholders' investments in a publicly held company.
• Insurance ensures that the buyer of a business or property will not have to later pursue the former owners for cleanup costs if an unexpected liability arises after the sale.
• To achieve a favorable rating or opinion from financial rating agencies
• To secure more attractive financing terms from lenders.
• To aid in the acquisition or divestiture of a property
• Environmental insurance covers environmental conditions that may occur as a result of changes in environmental laws or regulations.
• Insurance covers future occurrences, changes in the use of properties, and errors that may occur in the due diligence process.
• A company, or its financiers, has more recourse opportunities against an insurance carrier than it does against an environmental consulting firm that performed due diligence activities.
• Insurance may save time and money over the due diligence process.

1. Pollution Liability Coverage for Country Clubs

1. Country Clubs
2. Golf Courses

1. Limits-$5,000,000 Aggregate/Occurrence/$5,000,000 Expense
2. Features:

• Claims-made third-party BI and PD for pollution from designated sites
• Off-site cleanup
• Both sudden and gradual discharges
• Claim adjustment expense and defense cost subject to separate limit
• Underground tanks can be insured

2. Pollution Liability for Underground Storage Tanks

1. Gas Stations, Petroleum Operations

1. Limits:

• $10,000,000 Aggregate/Occurrence
• $10,000,000 Aggregate Expense

2. Coverage:

• Claims-made third-party BI and PD for petroleum pollution from storage tanks
• On and Off site cleanup
• Both sudden and gradual discharges covered
• $1,000 Minimum Premium

3. Requirements:

• Current tank tightness test
• Selected Site survey
• Any existing studies or assessments

3. Contractor’s Pollution Liability Policy

1. General, Street and Road, Excavating, Heavy Equipment Risks

2. Limits:

• $25,000,000 Aggregate/Occurrence
• $10,000 Deductible
• $2,500 minimum premium

3. Coverage

• Claims-made third party coverage for BI and PD
• Cov available for designated sites and ALL "Occupied" premises.
• Available for above and underground tanks

Flexible Financing Solutions

When you need business equipment, consider financing the purchases rather than paying cash or typing up traditional lines of credit.  Conserve working capital and preserve your existing lines of credit by using long-term equipment financing.  Through our unique relationship with CFC Investment Company, we can offer financing options to small business owners interested in equipment financing through a traditional equipment loan or lease or through an equipment line of credit.

Equipment Loans and Leases

Equipment, loans, and leases are one-time loans secured by the specific equipment you purchase.

The term matches the generally expected useful life of the equipment.  For example, a business owner might obtain a 36-month term for a computer system that will most likely become obsolete by the end of that period and a five-to-seven-year term for a milling machine because it has a longer useful life.

Advantages of Equipment Leasing

• Eliminates initial out-of-pocket costs, while giving you the freedom to choose just the equipment and vendor your prefer.
• Frees cash for more productive uses.
• Hedges against technological obsolescence.
• Reduce capital investment.
• Protects existing credit lines.
• Allows immediate use of product with no down payment.
• Improves balance sheet.
• Accelerates write-off.
• Eliminates depreciation scheduling.
• Produces possible tax savings.
• Accommodates flexible payment schedules.

Lines of Credit

If you plan to purchase several pieces of equipment over the next year, consider getting preapproved for a 12-month equipment line of credit.  The year-long period provides flexibility in planning purchases and allows you to stagger purchases throughout the year.

If you expect to be in the market for any type of equipment over the next year, talk to us in advance.  Often, you will get a better price on the equipment if the salesperson knows you've already arranged financing.

With an equipment line of credit, each purchase is financed as a separate loan or lease.  You can draw exactly what you need for purchases and pay back only what you borrow.

Many other lenders charge you an origination fee for equipment credit, approximately .5%.  Through CFC Investment Company, there are no such fees.  The length of repayment varies from 36 to 96 months, depending on the useful life of the financed equipment.

Once your are approved, accessing an equipment credit line is easy.  In most cases, all you do is fax or mail an equipment invoice.  CFC Investment Company pays your vendor directly, typically within 72 hours.

Getting Started

The application process is simple and can be completed by the phone in about five minutes.  You can usually get a credit decision within 24 hours.

Credit decisions are based on your company's credit history, ability to repay the loan and financial flexibility.  CFC Investment Company want to lend to you if you meet those basic criteria, have been in business for at least three years and can provide tax returns showing your ability to repay the loan.

You can count on Al Purmort Insurance Agency and CFC Investment Company to finance your equipment.

[CFC Investment Company is wholly owned subsidiary of the Cincinnati Financial Corporation.  It was founded in 1970 to provide CIC agencies with convenient, affordable vehicle leasing services.  The company quickly expanded into leasing and financing of commercial and industrial equipment for agencies and their clients.]

An insurance policy is designed to address the physical and financial aftermath of a loss. But identifying hazards and problems common in the workplace – and working to control or even eliminate them – can greatly help reduce the likelihood of a loss occurring in the first place.

At Al Purmort Insurance, Inc. through our relationship with Chubb Insurance Companies, we are as dedicated to helping our customers prevent insured losses as we are to responding when they occur. For our Life Sciences customers, that means offering you the services of our Technical Services team – loss control consultants who specialize in microbiology, ergonomics, environmental science, products liability, risk management and other areas critical to keeping your operation "up and running" safely.

 

LOSS PREVENTION SERVICES FOR THE LIFE SCIENCES INDUSTRY

Choose from any of the following topics or scroll down to review entire page:

• Expert response to your unique needs
• Specialist claim teams
• Swift response worldwide
• Property claims paid in 48 hours
• Aggressive litigation management

Expert response to your unique needs

You arrive at the office one morning to discover you have just been named in a lawsuit; your product is alleged to have serious flaws that caused complications in several patients.

Or, a gas leak in your R&D facility destroys an array of research cultures that took you six months to develop. Or, you learn that, somehow, several shipments left your European plant badly contaminated, and you must retrieve all the affected products as soon as possible.

Sound improbable? These may just be examples, but the fact is, the life sciences industry is complex and litigious. What’s more, the business and monetary value of laboratories and research facilities is greater than ever anticipated. That’s precisely why more and more medical technology companies are protecting themselves with specialized life sciences insurance programs from Chubb.

With Chubb, you can count on our worldwide claim staff to respond swiftly, knowledgeably and effectively in the event of a loss—and apply our world-class resources to protect your interests. In addition to the professional support provided to every commercial customer, Chubb offers biotechnology and medical device companies an array of specialized resources to address the unique complexities and difficulties involved in medical technology claims.

Specialist claim teams

• At Chubb, all life sciences claims are supervised by a special team of professional claim examiners who are thoroughly versed in the rapidly changing technical, regulatory and legal issues involved with medical technology claims. This dedicated team oversees the investigation, adjustment and defense of claims on behalf of our policyholders.
  
  To assure the most expert and knowledgeable management of your claim, the team includes both casualty and property claim specialists with extensive, first-hand experience handling medical technology cases, as well as advanced training involving professionals, regulators and educators in the fields of biotechnology and medical devices.

Swift response worldwide

• With its worldwide network of more than 110 offices in 30 countries, Chubb can respond to a claim virtually anywhere in the world. The claims teams in each office are supported by designated biotechnology professionals in our offices in Germany, France, the United Kingdom and the Netherlands.**

Chubb has the local knowledge and experience to protect your interests worldwide — and deal with suits or claims filed outside the country.

Property claims paid in 48 hours

• In the case of property damage and business interruption coverages, Chubb’s goal is to put you back in business as soon as possible. Our overall policy is to make every effort to issue settlement
  checks no less than 48 hours after the settlement amount is agreed upon.
• If you cannot resume operations at the same site, Chubb’s claim and loss control teams can help you locate and equip an alternate site.

Aggressive litigation management

• For claims that may result in litigation, Chubb takes a proactive team approach tailored to the interests of the insured.
• When handling product liability claims, we respond rapidly and vigorously to protect the interests of our insured. Prompt action is also imperative in catastrophic casualty claims. We leverage our position in a case to get maximum value for the defense, with the ultimate goal of protecting your bottom line by avoiding prolonged litigation.
• In almost every jurisdiction, we can provide the services of a law firm that has proven to Chubb its ability to handle liability and medical technology cases. Chubb may also call upon specialist life sciences law firms to work with local counsel to direct, manage or monitor the defense of our insureds.

 

BIOTECHNOLOGY: INVESTING IN RISK MANAGEMENT

Choose from any of the following topics or scroll down to review entire page:

• Property Conservation
• Pre-construction or renovation consultation
• Crime Prevention
• Business Continuation
• Products Liability Risk Management
• Employee Health and Safety Management in the Workplace
• Workplace Ergonomics and Industrial Hygiene Evaluations

Property Conservation

Fire protection plan review
An objective evaluation and analysis of your fire protection needs, to help you, your architect and contractor minimize the chance of loss and comply with the latest fire codes and safety standards before you break ground.

Flammable/combustible liquid and hazardous material storage
How you store and handle flammable and combustible liquids can have a dramatic impact on both fire safety and employee safety. We also help you identify potential contamination problems that may be presented by chemical reagents, and we suggest ways to prevent contamination of products of equipment by substances that could jeopardize your facility, your research, or your employees.

Infrared thermography
"Hot spots" on electrical equipment can lead to electrical fires. Using an infrared camera, we help you identify loose connections, faulty insulation, dust accumulations and other problems that can lead to a fire and jeopardize your ability to continue operating.

Pre-construction or renovation consultation

Preventative maintenance evaluations and site surveys
Your boilers, air conditioning, refrigeration, heating and other critical equipment is the lifeblood of your facility. Any interruption can cause financial loss as well as research set-backs. Our maintenance recommendations, logsheets and evaluations can help you keep your facility running smoothly.

Emergency response preparation and fire life safety evaluations
We can assist with developing, testing and reviewing your building evacuation plans, as well as updating those plans as your facility expands and your needs change. We can also help make sure you are in compliance with the latest National Fire Protection Association and life safety standards, so your employees, contractors and visitors are protected while they are on site.

Property conservation seminars
As part of our loss prevention service standard, we can conduct seminars designed to instill in both your management team and your employees and understanding of, and commitment to, fire life safety, emergency preparedness, disaster recover and other loss prevention topics.

Crime Prevention

Crime risk management review and checklist
It is an unfortunate reality, but up to 75% of the thefts suffered by a business are committed by trusted insiders. We can assist you in reviewing your administrative controls and make recommendations regarding asset vulnerability, burglar alarm systems, security personnel procedures, record keeping, goods in transit, and incident investigation.

Business Continuation

Business continuation plan
A good road map is an invaluable navigation aid. Consider a business continuation plan your company’s risk management road map – it can help you develop your insurance portfolio, limit damage in the event of a disaster, and resume operations with minimum interruption should a loss occur. We can evaluate your disaster preparedness "IQ," help you analyze the impact of "downtime," identify operational vulnerabilities and prioritize the allocation of critical resources so your business can continue while you recover from a major loss.

Electronic data processing disaster recovery plan
Your computer operation is the heart of your business. We can help you keep your systems up and running and recommend backup contingency plans that you can enact in the event of a loss.

Products Liability Risk Management

Product safety policy program and management committee development
Regulatory compliance is a key component of operation your facility, and safety is management’s #1 priority. We can help you achieve both. By guiding you in organizing a product review team to develop both safety and human factor standards, you can ensure that critical issues are addressed and resolved at the design phase – when improvements and changes can be most easily accommodated.

Product complaint handling procedures
We can help your customer service department develop a pathway to effective communication with a formal review process for handling and filing consumer complaints. Our goal is twofold: to help you comply with Good Manufacturing Practices (GMP) mandates and to enable you to quickly and effectively identify and correct problems as they arise.

Product warning and labeling review
We can help guide your firm through the maze of labeling standards set forth in the Code of Federal Regulations (CFR). Compliance with CFR provisions is critical since they are designed to alert consumers of potential hazards from product misuse and/or improper storage as well as to suggest ways to prevent injuries.

Quality control program review
Quality control (QC) is a critical part of your firm’s business plan. Today, it can also be a daunting challenge, since the complexities of doing business in the global marketplace can significantly impact your approach to QC compliance, where differences in standards are more the rule than the exception. Our in-depth review of your QC program can help you develop consistent product design, packaging, shipping and regulatory compliance procedures – no matter where in the world you conduct business.

Employee Health and Safety Management in the Workplace

Safety committee
A vibrant committee, operating with management’s full support, is one of the best ways for your firm to minimize accidents, increase productivity, and lower the risk of property damage. We can help you establish and maintain a safety committee to effectively maximize your loss prevention efforts.

Safety guidelines – policies and procedures
We can assist you in the development of workplace safety guidelines for your staff which underscore the fact the "safety is EVERYONE’S responsibility!"

Workplace Ergonomics and Industrial Hygiene Evaluations
Laboratory, office, manufacturing and assembly environments each presents unique worker safety challenges. Minimizing the risk of injury can have a significant positive impact on both employee productivity and your workers’ compensation insurance. Using special evaluation equipment and conducting employee interviews, we can help identify potential problem areas and recommend corrective action as appropriate. Our reviews target:

• Materials Handling Evaluation and Training
• Hearing Conservation
• Lighting Quality
• Job Safety Analysis
• Behavior-Based Loss Control Evaluations
• Accident Trend Analysis
• Accident Investigation

 

LIFE SCIENCES INSURANCE – OUR APPROACH TO CLAIMS

Choose from any of the following topics or scroll down to review entire page:

• Overview
• Preventing Fire Risks
• Preventing Equipment Failure
• Protecting Laboratory Animals
• Safeguarding Other Property
• Controlling Shipping Losses
• Enhancing Workplace Safety
• Contingency Planning
• Addressing Regulatory and Clinical Risks
• The Lessons

Overview

Can you imagine the potentially devastating consequences of a fire at your company’s facility? Even a small amount of smoke can wreak havoc — contaminating equipment and supplies, ruining weeks or months of research. And what would you do if a critical piece of equipment or a substance you needed to replace was out of stock? To whom would you turn? How would it impact the progress of your research?

Fire is only one calamity on a long list of events that can delay the research and development process at a biotech firm. Replacing lost research, documents, laboratory animals and other property as a result of a storm, theft or other major loss can be expensive and time-consuming. Furthermore, if the firm is poised to bring a product to the clinical-trials stage, and ultimately to market, such a setback could cause a venture capitalist to look for other investment options.

Your best defense is to develop a good offense: a risk management program that combines proven loss control techniques with a comprehensive insurance program. This booklet discusses several elements of a program designed to help protect your company’s facilities, equipment and employees—and, ultimately, its bottom-line. Although additional advice is available from legal counsel, insurance agents, brokers and consultants, this booklet provides biotech companies with a good starting point for developing an effective risk management program.

Preventing Fire Risks

Since even a small fire, or resulting smoke damage, can contaminate a sterile laboratory environment, it is vital that all employees be trained in preventing and containing fires. Electrophoresis and other laboratory equipment must not be allowed to run unattended because the high voltage and heat they generate could cause a fire. The use of over-tempera- ture interlocks and appropriate fuses can help prevent fires, as can regular maintenance programs that include the detection of hot spots in electrical wiring.

Research facilities should be constructed out of non-combustible and fire-resistive materials. Due to their flammability, it is not a good idea to install plastic benchwork, ductwork and plumbing or use plastic storage containers in clean rooms. Moreover, keep in mind that when plastic burns, it also gives off toxic fumes — a potentially deadly combination for personnel, firefighters and lab animals.

Large quantities of flammable liquids and chemicals should be stored in separate sealed rooms designed to contain fires and spills. Flammable liquids should be transferred to small- er containers in adequately ventilated areas. When transfer- ring liquids, metal containers should be properly bonded and grounded.

Only minimal amounts of hazardous chemicals should be left in lab areas. Open containers storing reagents being used in conjunction with electrical or motorized equipment should be supported upright within a secondary containment unit to help prevent liquids from spilling onto lab equipment.

High-pressure gas cylinders should be capped and stored in an upright position. The cylinders, along with the lines that carry compressed gas, should be tested for leaks on a regular basis.

Systems that detect both heat and smoke should be installed throughout your research facility Where possible, double- lock pre-action sprinkler systems should be installed in laboratories to help reduce the chance of water contamination. Finally, firms should periodically test all sprinklers, alarm systems and fire extinguishers to help make sure they are operating and in accordance with National Fire Protection Association standards and local fire codes.

Preventing Equipment Failure

Without alarms or a backup supply of electricity or refrigeration, weeks of research can literally melt away. For example, a series of power failures at one facility rendered frozen cells in solution useless. Even more devastating than the $250,000 property loss was the fact that it took the firm several months to reproduce the cells.

Equipment should also be connected to surge protectors to help prevent failure due to sudden power fluctuations.

Furthermore, it is important to perform preventative maintenance on all equipment and building support systems according to manufacturers’ suggestions. In addition to keeping up with maintenance schedules and following up with necessary repairs, all work should be thoroughly documented.

Protecting Laboratory Animals

Safeguarding lab animals is particularly important since they can be both expensive and difficult to replace once research is under way. To help prevent contamination, new animals should be isolated for about 30 days from those already being used in a study.

In addition, sensitive laboratory experiments should be discussed only with those employees and others who need to know about them. Publicity can draw unwanted attention from extremist groups, thieves and competitors. Security systems can help prevent others from interfering with sensitive and costly research efforts.

Safeguarding Other Property

The spectre of fire, theft and even simple carelessness under- scores the need for research to be documented hilly, accurately and regularly. Duplication procedures for lab books, electronic data, samples/cell lines and cultures should be followed carefully. Duplicate documents, as well as cell lines and cultures, should be stored off-site. If disaster strikes, duplicate documents and materials can enable staff scientists or technicians to swiftly recreate research without significant interruption of their work.

To help prevent the theft of proprietary R&D information and expensive equipment and supplies, companies need to establish clear security policies and measures. Access to company facilities and information should be restricted. A key card access system and surveillance cameras should be installed outside and throughout a facility. Visitors should be required to wear identification badges.

Access to critical information should be provided only on a need-to-know basis. Passwords and access codes can help keep unwanted intruders out of computer and telephone systems. However, it is important to change these codes when employees leave the company. Furthermore, with the advent of electronic data interchange and the Internet, firewalls and encryption techniques can be employed to prevent hackers, corporate spies and even disgruntled current and former employees from infiltrating computer systems to disrupt operations or steal data. Other programs can be installed to detect unauthorized system access.

Laptop computers, which are expensive and store substantial amounts of proprietary information, are extremely vulnerable to theft. Employees should be warned not to leave lap- tops unattended while traveling as well as at the office. Devices can be installed to make it difficult for thieves to steal personal computers, hardware, valuable laboratory and office equipment, and supplies. Facility audits and stockroom inventories should be performed on a regularly scheduled as well as a surprise basis.

Finally, it is important for a company to conduct comprehensive background checks on all potential employees and contractors. Biotech firms should require these individuals to sign nondisclosure agreements and warn them about a zero- theft-tolerance policy. Law enforcement officials should be contacted regarding all thefts, and all thieves should be prosecuted.

Controlling Shipping Losses

Products that are shipped to doctors and hospitals for use in clinical trials may be highly susceptible to loss due to contamination, spoilage, sabotage, breakage or theft. They require refrigeration, special handling and proper packaging.

A biotech firm should make sure that the transportation companies it uses have demonstrated experience in transporting medical products. If refrigeration or special handling is required, the hauler should indemnify the biotech shipper. When goods are shipped by air, they should be tendered to the carrier as close to departure as possible and placed on direct flights.

Gel packs and buffer materials such as styrofoam can help protect shipments when properly placed around containers. Styrofoam and dry ice can be used for shipping some products by overnight courier service. Other products may have to be transported in refrigerated vehicles. Probes can be placed on packages so temperature levels can be watched while the goods are in transit.

It also is advisable to attach handling instructions, including a 24-hour emergency contact number, to packages. However, goods that are valuable or easy to sell on the black market should be innocuously labeled and inconspicuously packaged.

Enhancing Workplace Safety

To help prevent injuries, certain areas of a facility should be off-limits to visitors and non-essential personnel. Compliance with the Federal Occupational Safety and Health Administration, FDA. Center for Disease Control, National Institute of Health and other regulatory agencies is crucial. A project review committee should review all new processes, tests, hazards and controls associated with a new project.

Employees should be trained in industrial hygiene, chemical and operational safety, and preventing and responding to slips, falls, cuts, burns, and even repetitive motion injuries. Those who work in labs designated biolevel II (BL-2) and higher should undergo medical exams when hired and have regular follow-up exams, including baseline blood testing.

When possible, construction, cleaning or maintenance contractors should hold the biotech company harmless for injuries to their employees.

Contingency Planning

Despite the best efforts, not all losses can be prevented. Consider what happened when a freezer’s compressor shorted and tripped a circuit breaker at a tissue bank one Saturday. As the temperature rose in the freezer, an alarm sounded, but the only employee on duty failed to hear it.

A second alarm activated the 12-hour emergency freezer recharging system. Upon hearing this alarm, the employee reset the circuit breaker and checked the freezer’s temperature gauges, which by then read normal. When employees returned to work on Monday, they discovered $65,000 in destroyed tissue.

The monetary impact of property losses are but one of the potential challenges facing a biotech firm. The consequences of not adequately protecting research laboratories, storage facilities, refrigerators, lab equipment, lab notes and research animals from fire, theft and other hazards could also significantly accelerate the firm’s bum rate or even cripple its ability to meet objectives under benchmark payment agreements with venture capitalists. Because even though a company’s revenue stream is interrupted while it rebuilds, there are still salaries to pay to retain key employees, as well as rent, utility and other ongoing financial obligations.

A prolonged interruption of the business can open the door for a competitor to bring a product through clinical trials and to market first. The firm may never fully recover. In fact, it is estimated that one out of every two such businesses that suffers a major property loss is unable to rebound quickly enough to ever regain its competitive position.

So that they do not put themselves into such jeopardy, biotech firms need to plan for contingencies. A well- thought-out business continuation plan, which contemplates all potential disasters — and all appropriate responses — can make the difference between never recovering from a major loss and continuing daily operations with minimal disruption. It can also reduce a firm’s financial vulnerability and help keep its insurance costs in check.

Geared for a quick response, the plan should address every- thing from communicating with the media to emergency procedures for handling lab animals and hazardous materials. It should detail how to secure a facility against further dam- age as well as suggest procedures to implement to help rebuild the company’s physical operating environment. The plan should also include a response team composed of staff from various areas of the company and should assign specific responsibilities to each team member in the event of an emergency or disaster.

Making arrangements for temporary facilities is one of the most challenging, yet most important, parts of the business continuation planning process. In the event of a major property loss, the response team must be prepared to rapidly secure architectural plans, property surveys and equipment appraisals and descriptions; check current building codes; obtain building permits; hire contractors; and purchase materials. Since construction projects typically hit snags, a clear course of action will help minimize delays.

Sharing the plan ahead of time with employees at all levels, as well as with local emergency and law enforcement personnel, will make its implementation all the more effective should it ever be needed. To help maximize its effectiveness, the plan should be tested periodically both to make sure it works and to ensure that it continues to fit a growing organization’s needs. Finally, a duplicate copy of the plan should be stored off-site, where it can be readily accessible if ever needed.

Although a contingency plan may help contain losses and put a company back on its feet, it does not diminish the need for a comprehensive insurance portfolio. A well-thought-out program can help put a biotech company back in business following a property or other major loss.

Examining the effectiveness of a firm’s insurance portfolio in light of its current, as well as its emerging, vulnerabilities is a critical part of the risk management function. Such a review can reveal, for instance, that insurance may be needed to reimburse a company for the extra expenses of reproducing research as well as to pay for such continuing business expenses as salaries when R&D income is lost or delayed.

Addressing Regulatory and Clinical Risks

As companies enter the clinical-trials stage, they begin to attract more interest from the financial community as well as pharmaceutical company investors. This increased visibility subjects them to much more scrutiny.., and greater risks. A higher profile, for example, makes such companies more likely targets for animal rights activists, extremist groups or thieves. But the greatest attention can come from a rigorous regulatory process.

Methods for maintaining and validating the purity, identity and potency of biological material are essential. The Food and Drug Administration (FDA) specifies these standards through Good Manufacturing Practice (GMP) guidelines and enforces them through the licensing process. A minor GMP oversight can cause the FDA to delay a project. (A microorganism found in one company’s purified water resulted in the FDA putting a hold on the project and closing the facility for almost six weeks.)

Although regulatory compliance helps to shield companies engaged in clinical trials from lawsuits, it does not eliminate a biotech firm’s responsibility to properly manufacture products, prevent contamination or adulteration and to warn of existing foreseeable exposures. The potential for litigation is clear: The hepatitis B drug, Fialuridine, prompted several multimillion-dollar lawsuits after five patients died of liver toxicity during a Phase II trial of a nucleoside analog drug.

Although the patients had signed medical waivers before treatment began, several suits alleged negligence on the parts of product developer Oclassen Pharmaceuticals, licensor Eli Lilly and various clinical investigators. The lawsuits challenged traditional immunities for researchers and suggested that scientists could have predicted Fialuridine’s toxicity and the probabilities of serious adverse reactions, according to press accounts. Since consent forms didn’t warn of possible death or permanent injury attorneys argued that the documents were inadequate.

Adverse affects were exhibited during the clinical-trial stage in the case of Fialuridine; in some other studies, unwanted or unexpected physiological changes in trial subjects may gradually induce illness, neurological damage, cancer, or reproductive abnormalities, including birth defects, or make the body susceptible to pathogens it can’t manage. Such changes or diseases can remain latent for many months or even years before manifesting themselves or their consequences. In some cases, 10 to 20 years can elapse from consumption to the date injury is realized. Lawsuits have increased in recent years as studies mature, an informed public becomes more litigation-savvy and biotech product research success grows.

Products liability insurance for clinical trial drugs or devices is a significant step forward to help protect a business from such damaging lawsuits. Even small biotech firms recognize it would be foolish to "bet the company" and risk operating without products liability insurance protection.

Firms involved in clinical trials can also employ several other tactics to manage the risks they face. These include:

Protocols. It is critical that the information emerging from the R&D stage reflects a study’s original goals. Derivative uses for a product, for instance, should become part of another study. Thorough studies will explore all possible drug interactions, such as immunologic reactions or mutagenicity, rate of absorption and the effects of dosage including retention and toxicity. Most important, protocol steps should be well documented.

Informed Consent. Case law, particularly the California case Brown v. Superior Court (44 CAL. 3d, 1988), notes that, ordinarily, a product manufacturer is not strictly liable for failure to warn of dangers that it neither knew nor could have known, given the state of the art at the time the drug was manufactured. But the case does not absolve manufacturers from the responsibility of disclosing all known and reasonably knowable risks to potential trial participants. It also is important that the disclosures be made in a full and objective fashion.

To attract subjects, companies sometimes downplay a clinical trial’s potentially harmful effects. In other cases, institutional review boards, composed of scientists, sociologists, clergy and others, may not realize that a trial’s disclosures are not clear or comprehensible to the average participant. In both situations, despite making disclosures, the sponsor still can be held liable for failing to adequately warn participants.

Clinical Agreements. Clinical trials conducted by a sponsor’s own staff or on its own premises create more hazardous premises and professional liability exposures. Although it is advisable and economically beneficial to subcontract clinical investigations to experienced clinical investigators at clinical research organizations, research hospitals and universities, it is important for legal counsel to review contracts and indemnity agreements into which they will enter with these parties. The sponsoring organization should not assume liability beyond the responsibilities indicated in the protocol. Agreements should hold investigators liable for errors and negligence related to their contractual manufacturing and oversight responsibilities as well as for failing to comply with regulations.

The Global Business Arena. Companies conduct clinical trials overseas in what frequently are perceived as environments with favorable regulation and less litigation activity. But there are trade-offs. If the company intends to eventually offer the product in the United States, it will still need to demonstrate the product’s safety and effectiveness to the FDA. Furthermore, a company will not be able to initiate a trial overseas unless it satisfies both local regulatory and insurance requirements.

In Germany, for example, a firm will only be allowed to engage in clinical trials if it has local operations or conducts the research through a German co-venturer. Typically, insurance must be purchased from an insurance company licensed in the country in which a trial is conducted. Gaps in local coverage are common since insurance policies vary widely from country to country and expose a firm to additional risks. Such concerns can be addressed by obtaining additional coverage in the form of a "Difference in Conditions" policy from a U.S. insurer.

The Lessons

Whether a biotech company is just starting up or is engaged in clinical trials, it’s clear that establishing good management practices, policies and procedures is key to helping to control its vulnerabilities. The FDA’s Good Manufacturing Practices provide a starting point. Implementing quality standards, such as the International Standards Organization’s ISO- 9001, can help provide an even higher level of loss prevention by addressing unsafe workplace practices, contamination, errors in clinical protocols and labeling errors that result in injuries, regulatory or production delays, bad publicity and unwanted litigation costs.

But, as this booklet has pointed out, even the best standards
cannot prevent all losses. Hence, it is important for biotech firms to train employees to identify potential problems and help prevent them from becoming real. Proactive firms also establish procedures to quickly mitigate losses that couldn’t
be avoided and help prevent them from escalating into disasters. Management can show its commitment to the risk management process by putting clearly defined policies in writing — and making sure they are carried out.

Larger, more mature companies should consider hiring a full-time risk manager who can help address the property, liability and financial exposures the company faces. Smaller companies can balance science and entrepreneurism with business planning responsibilities by dividing risk management tasks among the firm’s chief financial officer and the heads of various departments, including R&D, clinical trials administration, human resources, security, information technology and maintenance.

Finally, CFOs and risk managers alike can seek advice from insurance professionals who specialize in life sciences. Such specialists can help companies manage their property and liability insurance vulnerabilities through improved lab and plant safety, manufacturing processes and regulatory compliance. They also can help companies design insurance pro- grams that fit into the overall risk management planning, because in the final analysis, good risk management is synonymous with prudent business management.

You have come to the right place if you are:

A financial institution -
    - A commercial bank
    - A savings and loan institution
    - A life insurance company
    - A pension fund
    - A credit company
    - An investment bank   

In commercial real estate -
     - A buyer or seller
     - Owner
     - Developer
     - Investor
     - Manager
     - "Brownfield" development

The environmental issues and concerns include:

• Phase I environmental assessments fail to identify all environmental issues. Some estimates suggest that this might happen in as many as one-fourth of all Phase I reports.
• Unknown contamination discovered after property transfer
• Changes in environmental regulatory requirements
• Contamination from neighboring properties
• Historical use
• Improper remediation procedures leading to larger problems
• Stockholder suits

For financial institutions making commercial real estate loans:

Pollution coverage and mortgage impairment insurance for lenders who hold title, operating interest, or contingent ownership of property is increasingly important and is intended to cover lenders from liabilities that arise during the loan workout and property disposition process. Environmental insurance can protect against the loss of collateral value, the inability of the borrower to repay the loan due to environmental problems and liability for environmental conditions at foreclosed properties.

For property owners, developers, managers, investors and buyers and sellers of commercial real estate:

Environmental insurance can offer coverage for bodily injury and property damage, clean up costs, remediation expenses, interrupted business operations, property devaluation, contract liability, and legal defense expenses for pollution conditions at your property. The insurance can be used to expedite financing or mergers and acquisitions.

Remediation "stop loss," or "cost cap" insurance is also available, which allows the property owner to manage the economic risk when environmental remediation projects exceed projected costs.

For "Brownfield" developers of properties with known environmental problems and planned remediation, environmental insurance is a crucial factor in successfully completing "Brownfield" redevelopment.

The advantages of using environmental insurance include:

• Coverage for environmental conditions that may occur as a result of changes in laws or regulations, future occurrences, changes in use of the property and errors that may occur in the due diligence process.
• An institution has more recourse opportunities against an insurance carrier than it does against an environmental consulting firm that performed due diligence activities.
• Insurance may save time and money over the due diligence process.
• A financial institution or property owner can transfer the bulk of its environmental risk to an insurance carrier, while in the due diligence process environmental risk is still retained by the lender or borrower.

Environmental insurance may provide credit support benefits.

What is Vehicle Leasing?

There are two common ways you can pay for a new vehicle.

1. Purchase it with cash or finance most or all of the amount.
2. Or, Lease the vehicle for a specific period of time and finance only the amount the vehicle will depreciate in that time.

If you lease, your monthly payment will primarily cover two costs: the depreciation amount and the financing for that amount.  The interest you pay on the loan is based on the amount of the depreciated balance.  When you buy a vehicle, you pay for depreciation and interest on the loan that's based upon the total value of the vehicle.  Different vehicles have different depreciation rates.  Vehicles with the lower depreciation rates have lower lease payments.

Is leasing right for you?

Consider vehicle leasing if:

• You like having the option of financing 100% of the purchase price.
• You don't like tying your money up in a depreciating asset.
• You want to drive a more expensive vehicle and have lower monthly payments.
• You want to simplify your record keeping for business and tax purposes.
• You use your vehicle for business purposes over 50% of the time. (The amount you use for business is tax deductible.)

Responsibilities of the Lessee

As with any lease, you need to provide and pay for insurance coverage and all regular vehicle maintenance as required by the vehicle manufacturer.  You also need to pay all taxes and fees assessed on the vehicle.

Vehicle Leasing Traps and How to Avoid Them

Up-front Fees and Charges - Most vehicle leases require payment of various up-front fees, e.g. a security deposit and fees for title, acquisition, documentation, and capital reduction.  Through Cincinnati Insurance company's CFC Investment Company (CFC-I) you're not charged for any of these.  Your initial investment is just the first month's lease payment.

Mileage Restrictions - Most leases restrict mileage to 15,000 miles per year and charge a fee for mileage over the limit.  This fee can be substantial with most all leases.  CFC-I leases do not have mileage limits or wear-and-tear clauses.

Capitalized Cost - This is the cost upon which the vehicle lease will be based.  This is often determined using the full Manufacturer's Suggested Retail Price (M.S.R.P.) for the vehicle.  CFC-I leases are based upon the net cost of the vehicle, not the M.S.R.P., giving you substantial savings.

Extremely Low Monthly Lease Payment - They may not be telling you something.  The most important things to consider when leasing a vehicle are the vehicle's price, the lease's true finance rate and the value of the vehicle at lease termination.  With CFC-I, all lease payments and the depreciated balance are agreed upon in advance and are spelled out in the vehicle lease agreement.

Other Advantages of Leasing through CFC Investment Company

• You can buy, sell, or trade at any time during the lease term without penalty.
• CFC-I's vehicle lease agreement allows you to realize equity in the vehicle at lease termination.  You help determine the residual value.
• CFC-I will work with directly with either your dealer or our dealer for the best price on the vehicle.

We Keep it Simple for You

Getting a lease through CFC Investment Company is easy.  Just follow these simple steps:

1. Determine exactly which vehicle and options you want.  CFC-I can provide you with a list of available options for any vehicle.
2. Negotiate the best price to purchase the vehicle.  You may use your local dealer, or if you prefer, CFC-I can price the car for your.  CFC-I works with many dealers that give us preferred pricing.  If you are using your local dealer, we can provide you with information on any vehicle that lists the dealer's cost and M.S.R.P.
3. Contact Al Purmort Insurance Agency or CFC-I for a lease quote based on your negotiated price.
4. Provide CFC-I with the necessary information for credit analysis.

Finally, CFC-I contacts the dealer to finalize the purchase and send the vehicle lease agreement to you for signature.  Upon receipt of the signed vehicle lease agreement and initial lease payment, CFC-I immediately sends the check to the dealer.

[CFC Investment Company is wholly owned subsidiary of the Cincinnati Financial Corporation.  It was founded in 1970 to provide CIC agencies with convenient, affordable vehicle leasing services.  The company quickly expanded into leasing and financing of commercial and industrial equipment for agencies and their clients.]