As the distribution of COVID-19 vaccines is rolled out across the country, pharmaceutical industry insurers can share their experience on what constitutes a successful and safe distribution process.
Allianz Global Corporate & Specialty (AGCS) is an insurer with such experience working with customers to ensure the safe transit of sensitive drugs. Andy Simpson of Insurance Journal turned to AGCS to provide insight into the logistics, risks and insurance associated with vaccine transportation. In the next question-and-answer 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 the CIOVID The distribution of vaccines differs from other pharmaceutical distributions and what the market for renewing pharmaceutical insurance might look like.
What types of companies are your policyholders involved in the vaccine project?
Allianz Global Corporate & Specialty has a number of policyholders in the pharmaceutical industry, ranging from manufacturing to the worldwide distribution of vaccines.
What is a successful vaccine distribution process? What are the details regarding the logistics and supply chain of vaccine distribution? Which entities and people are involved? When does your customers' responsibility start and when does it end?
A successful vaccine distribution process begins in our mind with the transportation of the raw materials – Active Pharmaceutical Ingredients (API) – that make up the vaccine to the point of injection into the individual receiving the dose of the vaccine. Our goal as an insurer of this cold chain from end to end is to have no product loss due to temperature fluctuations, security breaches or just physical damage in transit.
The logistics and supply chain of a vaccine are significant. This can involve multiple transport and storage methods, ranging from specialized integrated transport companies transporting ultra-cold product that can be fragile in transit and requiring a narrow temperature range in which it is shipped before it begins to reduce the potency of the vaccine.
Other modes of transport include freight in combination with air and with more stable vaccines, including by sea. All vaccine transportation and packaging methods must be validated by a government agency (i.e., the Food and Drug Administration here in the United States) to maintain the cold chain from origin to destination. This is done through the use of multiple transportation and packaging methods, including environmentally friendly temperature controlled trucks and containers, and specialty packaging containing dry ice or cold packs depending on the temperature range in which the vaccine is to be shipped.
The time when our insured responsibility starts and ends depends on the circumstances. Most pharmaceutical manufacturers run the risk of losing raw materials to delivering a finished vaccine to a distributor. The distributor then assumes the risk of loss through the last mile distribution to the vaccination site. As we've learned with the Covid environment, circumstances can change quickly. For example, the public-private partnership with the Covid vaccine has significantly changed the standard when it comes to who and when is at risk of loss.
What are some of the inherent dangers of vaccine transport and how are insurers working with their customers to mitigate these risks?
The main concerns in transporting vaccines are excursions (temperature anomalies) during transport. Our global loss prevention team works with our policyholders to minimize any excursions during transit. We have tabletop talks identifying contingency plans if things don't go as planned in transit. Our loss prevention team is available at any time to work with our insured and brokers to "rescue" shipments that may fall outside their temperature specification while being delayed in transit.
How does Covid-19 vaccine distribution differ from other pharmaceutical distributions? What are some of the unique risks to insurers and customers due to the sheer size and scope of this project?
We are regularly involved in shipments with ultra-cold, 2-8 ° C and ambient temperature, the current Covid-19 shipments challenge us with their volume combined with the pressure that the movement of the vaccines will place on the temperature-controlled transport sector. up to and including the distribution of the last kilometer.
There are the usual requirements in terms of storage, safety, security, timeliness, planning of the vaccines that we are used to manage, the short term volume causes some concern not only about the movement of the vaccine but also all other temperature controlled goods in transit, ie Covid test kits to process reagents in bulk, during this Covid time.
What does commercial insurance cover during this process and what does it not cover? How long is the rollout expected to continue in massive volume? How can insurance renewals be affected? Insurance cannot cover everything – what are some common exclusions or areas that are typically not covered (cyber)?
A standard ocean freight policy covers all risks of physical loss or damage from an external cause while the goods and / or merchandise are in normal transit.
It is not known how long the rollout was expected to continue in massive volume
We expect that pharmaceutical company / account renewal will be challenging in 2021. The ocean freight market is expected to continue pushing for rate / premium increases and / or increased retentions and / or reductions in terms of the overall market, but we would expect / or temperature sensitive goods to be scrutinized more closely.
The standard freight policy includes both implicit and explicit guarantees in the policy, but some standard exclusions are delay, market loss, inherent vice, misappropriation, and in the past year, some companies have added a cyber exclusion and communicable disease approval. Exclusion clause.
Several years ago, when the market was very soft, brokers started to reintroduce the risk of delay (deterioration) into the policy as a risk covered and in this current environment, insurers are now trying to either exclude delay and / or some sort of of sub-limit and annual total.
Have customers sought additional coverage for this global rollout of the vaccine compared to normal distribution? Is the extra coverage available?
Most of the global pharmaceutical customers and / or global logistics providers and / or global medical distributors already have adequate coverage within their programs. However, as more companies come online with an alternative vaccine and / or more companies are involved in distribution, we would expect policyholders to potentially seek additional limits and / or coverage due to the introduction of the vaccine.
What is the biggest challenge of this distribution from an insurance point of view?
The biggest challenge is disruptions in the supply chain and / or the lack of available power units / trailers / aircraft to move this volume in a world that is currently not running at 100% capacity.