Industry insights

Life Sciences

Life Science organizations continue to innovate

Like most industries, life science companies are being affected by insurance premium rate increases and capacity issues. But many risk and insurance managers in the sector have previous experience using alternative risk financing methods to adapt to challenging market conditions for risks such as Product Liability and Property Damage/Business Interruption (PD/BI) risks. In the current environment, there is now a strong focus on Directors' & Officers' (D&O) and Cyber too.

The new focus - D&O and Cyber

The continued high number of securities class actions filings associated with this industry are driving D&O capacity shortages and premium rate hikes, in particular for US-listed life science organizations. This pressure is reflected in trends we are seeing in Aon’s 2021 Captive Benchmarking Survey, with a 35% increase in captive D&O gross written premiums between 2019 and 2020.

A similar swing has been seen in Cyber, with total captive premium spend increasing by 33% Year on Year. The recent surge in the number of ransomware attacks has resulted in an extremely challenging insurance market with increased pricing and diminishing capacity. Given the limited capacity on the risk transfer market, captive owners are turning to alternative risk financing solutions.

Financing core risks

Significant Product Liability risk exposures have long been a pain point for life sciences. Liability rates remain high and risk transfer capacity is limited. This is particularly true for the large global players, who rather than seeking risk transfer solutions often turn to their captive for support. Net retention for Product Liability risks in captives we manage are on average in excess of $100m,1 demonstrating the extent to which captives are providing a viable risk finance solution for the industry.

88% of Aon-managed life science captives have some form of PD/BI in their program.2 This is not surprising, as the past 12-18 months has been challenging for almost all clients in this sector in regards to this line, with some improvement in recent renewals. Interestingly, captive use has been shifting in the industry and we are noticing an increased focus on Business Interruption (BI), in particular Non-Physical and Contingent BI.


1 Aon's 2021 Captive Benchmarking Survey

2 Aon's 2021 Captive Benchmarking Survey

Industry numbers

Insurance entities under management


in Gross Written Premium (USD)

Lines of business written

Percentage of Aon-managed insurance entities writing line of business

Property Damage/Business Interruption


General/Public Liability




Workers' Compensation


Product Liability


Type of entity

Percentages rounded to nearest whole number

Top five emerging risks

By 2022

Top five emerging risks

By 2022

Parent country and size by revenue

Industry insights


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