There is now a convergence of product liability and professional liability issues in the life sciences and health care sector. (Credit: Vasyl/Adobe Stock)
Like most industries, life science is facing a potentially turbulent era on the health and regulatory front. Emerging technologies, shifting provider roles and new legal threats are opening costly coverage gaps in product and professional liability that are impacting business leaders and their health care teams.
In life science, new liability risks are emerging for company leaders and the health care professionals who test and use their products. These risks can pose unique challenges throughout a product’s life cycle and require insurance experts who can spot and close these coverage gaps when they happen.
In addition, depending on the product and how it’s researched, tested and used over time, there is a convergence of product liability and professional liability issues that have been rarely seen before. And that requires risk experts who can spot coverage gaps before issues happen.
What’s driving the convergence of life science and health care liability risks?
Today’s life science leaders are surrounded by reasons to reevaluate a combination of new risks in their manufacturing operations and health care environments that employ patient care and lab professionals. There are three critical operating factors:
- Disruptive technologies: According to the EY Firepower report “Life Sciences Dealmaking — Trends in 2025,” life science partnership activity related to artificial intelligence (AI) reached all-time highs in 2024 with a majority of life-science leaders planning an increase in investments for data, digital and AI investments in 2025. Such innovations have the potential to speed medical research and bring valuable products to market faster. However, insurance experts caution these advancements are moving so quickly that it can be difficult for business leaders to determine whether a potential liability is due to product error or a medical error. Experienced insurers are important advisors in evaluating potential risks when life science and health care teams collaborate. Today’s breakthroughs are increasing the need for ongoing evaluations.
- Legal system abuse: News outlets often report about large court settlements in the millions of dollars. To some degree, that is influenced by legal system abuse, which is a term that describes various tactics employed by attorneys to increase the costs and time involved insurance disputes. Occasionally, court cases involve third-party funders who benefit from a court ordered settlement. Life science companies have traditionally faced greater monetary risk in liability cases because individual patients are less likely to sue their own health providers due to their personal relationship. Attorneys are also aware that businesses tend to be insured for higher limits than individual health care providers. In addition, the more complex liability environment due to technological advancements has caused inflated costs as a result.
- New delivery models: From telehealth to faster development processes for high-demand treatments, life-science companies and health care partners have raised the bar on innovation — and potentially a new series of risks. Life science companies are doing traditional R&D (research and development), but some may be adding a delivery component like telehealth, individualized testing or product customization for individual patients. While that’s the future of medicine, life science leaders need to make sure their product and professional liability coverage provides the right amount of protection so they can innovate safely.
Where serious coverage gaps can emerge
Life science leaders should consider insurers who have deep understanding of life-science research and development and the health care professionals who bring them to patients. These relationships are crucial for asking the right questions about risks that leaders may not know.
It’s important to realize that health care innovation is being driven by a wider range of experts than ever before at all stages of delivery. Evolving business models can introduce new coverage gaps if life science leaders and their health care partners fail to see exposures along the way.
As health care technology and product innovation move ahead, both can open coverage gaps between traditional product and professional liability coverage due to more complex risks that may happen now or in years to come. For example:
No. 1. Diagnostic testing
One of the oldest life science liability risks is taking on more complexity as labs are becoming more specialized with some even developing and branding their own versions of established tests.
If a faulty test kit results in a false negative, that’s traditionally stopped at a product liability claim. However, we are now seeing labs packaging their own test kits under their label. So, for the manufacturer working with that lab — and the lab itself — product-liability exposure still exists. But if something goes wrong in the interpretation of the lab-developed test, professional liability exposure could become a factor.
2. Dietary supplements
Continuing the test discussion, non-prescription supplement manufacturers have also embraced direct consumer testing to offer a more personalized health experience.
Maybe a manufacturer distributes individual customer tests with personalized insights developed by AI, and they employ health care workers to explain the results to customers. Does a manufacturer’s current liability coverage contemplate all the potential claims that could be associated with this type of service? Life science leaders may not always know what to ask.
3. Drug compounding
The explosive popularity of glucagon-like peptide-1 agonists, better known as GLP-1 drugs, to treat obesity as well as diabetes has created shortages since 2022. This has led to rigorous compounding to deliver these medicines. (Compounding pharmacies are legally allowed to mix existing approved pharmaceutical compounds to meet critical drug shortages and other patient needs.) While the GLP-1 shortages were slowing down in 2025, compounding pharmacies have developed significant batch compounding businesses in recent years, where they’re manufacturing medications in bulk. Are they selling directly to patients or distributing as a wholesaler? That opens a whole range of questions that need to be asked to determine whether coverage is adequate.
Closing the gaps and spotting new ones ahead
If a business currently manages its product and property-liability coverage with a single carrier, perhaps they have many of the issues covered. However, the changing technological, legal and professional staffing environment may call for a more customized approach in the future.
Some questions to consider include:
- Have we recently created products or services that could be outside the scope of any liability coverage we currently have?
- If so, what supplemental product or professional liability may be necessary?
- Are our health care professionals adequately insured for the work they’re performing now?
- Are we buying enough insurance to prepare for rising verdict amounts in the business areas we’re involved in or a legal environment where verdicts are delivering higher awards?
Partnering with an experienced insurance company can be beneficial and symbiotic to the mitigation efforts undertaken by a life-science business. Carrier specialists in risk solutions for the life science industry know the unique challenges that come with manufacturing and distribution. The insurer can help companies prepare for and respond through specialized coverage solutions and innovative risk engineering.
Lauren Goren is underwriting director of life science for The Hartford. Cinthya Rios is underwriting director of allied health care professional liability for The Hartford. The article is published with permission from The Hartford and may not be reproduced.
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