Beazley Expands Regulatory Coverage for Nutraceutical Firms
Beazley, a leading insurer of manufacturers and distributors of nutraceutical products, has broadened coverage under its NutraGuard policy to address a wide array of regulatory risks confronting these companies.
Beazley's coverage endorsement addresses five regulatory risks, two deriving from federal law and three specific to the State of California. Given that California constitutes one of the largest markets for nutraceuticals in the US, most firms active in this business are likely to have some exposure to that state's regulations. The coverage provided relates to the following California and federal laws:
- California's Safe Drinking Water and Toxic Enforcement Act, commonly known as Proposition 65. This requires businesses to provide warnings to Californians about significant exposures to chemicals that cause cancer, birth defects or other reproductive harm. The lengthy list of such chemicals was most recently reissued on December 29, 2017.
- California's Health & Safety Code as policed by the California Air Resources Board (CARB). CARB is the primary state agency responsible for actions to protect public health from the harmful effects of air pollution. In the nutraceutical space, its concerns are primarily directed at volatile compounds that could affect air quality. The state's Health and Safety Code controls volatile organic compounds in consumer products, including health benefit products.
- California's Rigid Plastic Packaging Container (RPPC) Act. The act provides for the enviro-friendly treatment of plastic packaging for volumes of between eight ounces and five gallons. Statutory exemptions exist for containers used to hold materials regulated by the U.S. Food and Drug Administration but nutraceutical companies can still fall foul of the regulations if they are selling complementary products that are not ingested.
- The Federal Food and Drug Administration's rule on "non-functional slack-fill", which treats packaging as presumptively misleading if it prevents customers from viewing the container's contents and contains "non-functional" empty space. The challenges this rule poses for many nutraceutical companies prompted the American Herbal Products Association to issue guidance on the subject in 2016.
- The Federal "Made in USA" labelling requirements, which are policed by the Federal Trade Commission. Nutraceutical companies claiming that their products are made in the USA are exposed to regulatory action if their non-US ingredients or manufacturing processes prove to be more than "negligible".
"Neutraceuticals are booming," said Beazley underwriter Sarah Fiorito. "But the firms that produce and distribute them - many of which are quite modest in scale - can be challenged to keep pace with the wide range of federal and state regulations that affect them. In California in particular, we have seen an upsurge in actions for Proposition 65 violations triggered by enterprising law firms seeking whistleblower payouts. California consumers are among the most health conscious in the nation, but nutraceutical companies targeting this market must satisfy complex regulatory requirements."
Beazley is a pioneer in underwriting regulatory liability coverage for healthcare providers, offering hospitals and health systems protection against violations, including Medicare and Medicaid misbilling errors, since 2012. Three years later, Beazley launched Beazley NutraGuard, offering insurance tailored to the needs of nutraceutical manufacturers and distributors. The form covers products liability, general liability, errors and omissions (E&O), product recall expense, employee benefits liability, cyber/privacy, and hired/non-owned auto insurance. Coverage is available to companies active at all points of the nutraceutical value chain, from ingredient producers to product manufacturers to wholesale or retail distributors.
Beazley's new regulatory liability coverage for nutraceutical companies is available by endorsement to NutraGuard, with limits of up to $100,000 available.