Life in plastic, it’s fantastic (as long as you have Prop 65 cover)
Miriam Goddard, Head of Professions, on how a lunch at last year's Target Markets Summit led to the launch of a ground breaking new insurance cover.
Almost exactly a year ago, while attending the Target Markets annual summit in Arizona, a Hiscox colleague and I had a fascinating lunch with Safehold Special Risk - a division of Wells Fargo Insurance - who mentioned a client in the plastics industry having a particular problem with California Proposition 65, or Prop 65 as it's more commonly known.
For those who don't know the facts behind Prop 65, it's a piece of legislation for products sold in California that demands that manufacturers, distributors and formulators provide 'clear and reasonable' warnings on products that contain chemicals known to be carcinogenic or cause birth defects. Failure to display adequate warnings can lead to large fines - up to $2500 per day - and has led to millions of dollars paid out in recent years.
The Prop 65 problem
The problem for those businesses involved with these chemicals is that the various liability policies - product, public, pollution - do not cover claims related to Prop 65. And the Society of the Plastics Industry (SPI), the trade association responsible for the plastics industry, couldn't find an insurance carrier to offer cover.
Working with Besso as our London market placing broker, Safehold, and the SPI, we had a look at the problem and began to work out if we could come up with a solution. The good news was there was plenty of data available which meant we could start to understand the exposure and we felt it had some correlation with our existing casualty book.
Less than a year from concept to launch
In under 10 months we were able to come up with a new wording - no mean feat for such a complex risk, as well as the creation of a ratings base, application and pre-underwriting criteria. And last month, together with Safehold Special Risk, we were delighted to announce the launch of the insurance industry's first California Proposition 65 Insurance Program.
Interest has already been very high and it's clear that there is a pent-up demand for this type of cover. This is what Lloyd's and London does so well; innovate to meet an unmet demand to cover a particular risk exposure that admitted lines in the US just can't meet. And I think that less than a year from lunch menu to product launch says a lot about all those involved.
For more details on Prop 65 click here.