39 BomBay ChamBer review: July-august 2015

Insurance cOMMITTee

Workshop on

Managing Risks and Liabilities in the Pharmaceutical and Food & Beverage Industry

17 June, 2015

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The recent high profile noodles recall has highlighted the urgent need for Indian manufacturers to reassess their product liability and product recall insurance cover both domestically and internationally. As Indian manufacturers businesses expand, their global exports increase as does their exposure to liability risks. Against this background, Bombay Chamber organized a workshop on Managing Risks and Liabilities in the Pharmaceutical and Food and Beverage Sectors

Mr. Praveen Vashishta, Chairman Insurance Committee, Bombay Chamber and CEO – Middle East and India – Howden Insurance Brokers set the theme for the day

The speakers for the Inaugural Session were Mr. Sanjiv Navangul, Managing Director, Janssen India, Johnson & Johnson and Mr. Deepak Jain, Founder and Managing Director, Dlecta Foods Pvt. Ltd.

Mr. Sanjiv Navangul addressed the audience on the emerging risks faced by the Pharmaceutical industry. Amongst many others, Huge Investments in Research and Development coupled with long development cycle and low success rate are the major risks faced by the Pharmaceutical Industry. Mr. Navangul also presented his views on how the Pharmaceutical Sector could create value in a challenging environment.Mr. Deepak Jain addressed the audience on the various Risks and uncertainties faced by the Food & Beverage Industry. The Changes in the Food Safety regulatory Environment and Rapidly Changing Consumer environment are the risks and uncertainties most critical to the F&B sector. He concluded by saying “An agile and responsive organisation is the most effective de-risking strategy”

“an agile and responsive organisation is the most effective de-risking strategy.”

Panel Discussion on “Packaging and Contamination Claims – Prevailing Law and Global Case Studies” & “Future Product Liability Trends.”

Panel Members:

– Shane Sayers, Partner, Kennedys Law LLP

– Karishma Paroha, Senior Solicitor, Kennedys Law LLP

Shane Sayers, Partner, Kennedys Law LLP provided very interesting and insightful global case studies in respect of packaging and contamination product liability claims, including for example the settlement of global intraocular claims under an agreed protocol, contaminated water bottles, and contaminated milk and chocolate product recalls. Shane also considered practical ways to settle such claims on an international scale, such as ADR, mediation, arbitration as well as Part 36 offers. He also illustrated the importance of court appointed experts in certain parts of Europe and provided key differences and risks specific to US litigation.

Karishma Paroha of Kennedys also provided a fascinating forecast for future product liability trends with reference to current innovative technologies, new products and new types of product liability claims including medical devices, nanotechnology, epi-pens, drones, allergy claims, autonomous cars, 3-D printed products and obesity claims. Karishma concluded by considering the insurance implications of these future trends e.g. the need for manufacturers to ensure they have considered need for product recall insurance/worldwide cover where products sold globally and to have mitigating actions and contingency plans in place.

Ms. Lysha Lewis, Bombay Chamber; Ms. Karishma Paroha, Kennedy's Mr. Sanjiv Navangul, Managing Director, Janssen India; Mr. Deepak Jain, Founder and Managing Director, Dlecta Foods Pvt. Ltd.; Mr. Praveen Vashishta, Chairman

Insurance Committee, Bombay Chamber and Mr. Shane Sayers, Kennedy's

BomBay ChamBer review: July-august 2015 40

Chamber Activities

Panel Discussion on “Clinical Trials: Emerging Regulatory Dynamics & Risks”

Panel Members (L to R) :

- Ms. Deepika Mathur, National Liabilities Manager, HDFC ERGO General Insurance

- Ms. Suneela Thatte, President ISCR and Vice president Global Operations, Quintiles (Moderator)

- Dr. Sadhana Joglekar, Executive VP & Area Medical Director for Asia Developing Countries, Glaxo Smithkline

- Mr. T.L. Arunachalam, Director – Global Strategy & Special

Projects, Bharar RE Insurance Brokers

This panel discussion evoked great interest among the audience. It began with updating those present on the recent developments in the last 2 years pertaining to clinical trials. The panel also spoke on the Compensations Amendment guidelines and how the amendment balances/moderates the risk from an operational perspective. The panel also deliberated on the Indian Pharma Industry’s preparedness for Insurance, the Role of Brokers, the Products available in the market that can help minimise the loss.

Panel Discussion on “Data Protection and Cyber Risks”

Panel Members (L to R):

- Mr. Amit Bansal, Senior Director, Deloitte Touche Tohmatsu India

- Ms. Uttara Vaid, Founder, Uttara Vaid Advisory Ltd. (Moderator)

- Mr. Mahesh Chainani, Senior VP & Head – Liability Vertical, Howden Insurance Brokers

- Mr. Nitin Mehta, Director, Ernst & Young

Cyber risk is now rapidly becoming a top boardroom

concern, given the increase in a large number of high

profile Cyber attacks that have been faced by not just

corporates, but governments, organisations in health care

and educational sector et al.

Given this background, the consensus among the

panellists was that given the inevitability of its occurrence,

there are only two types of organisations in the world

today, those who know that they have suffered a Cyber

attack and those who don’t know that their IT networks

have been compromised.

Uttara Vaid who moderated the session, mentioned how

the risk which until a few years ago , was thought to be

just the problem of the IT department of a company,

now has assumed worrisome proportions for the entire

organisation because of the exponential growth of a few

risk factors such as the

• Blurred lines of distinction between personal and

official computing equipment and the BYOD culture

prevailing in most organisations

• The proliferation of social media ,

• An increased reliance on outsourced service providers

including Cloud Computing and

• The dynamics of Big Data marketing.

The panel deliberated on how it was most important for

a company to create an internal awareness about the

risk and a culture which actively encouraged employee

participation in mitigating internal risk factors, alerting

the management on finding suspicious network traffic and

taking cognisance and corrective action promptly to avert

a major security breach.

The panel deliberated on how it was most important for

a company to create an internal awareness about the

risk and a culture which actively encouraged employee

participation in mitigating internal risk factors, alerting

the management on finding suspicious network traffic and

taking cognisance and corrective action promptly to avert

a major security breach.

The panel also deliberated on the regulatory compliance

that exists in different countries around the the world

with specific emphasis on the October 2011, US SEC

guideline requiring US listed companies who have

undergone a major security breach to report the same

to SEC.

The Dec.2013 Target security breach was taken as a

41 BomBay ChamBer review: July-august 2015

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scase study by the panel, the losses that the company

has suffered since then and what could have been

done by the company to avert the attack and minimise

the damage. Nitin Mehta and Amit Bansal shed light

on effective vendor management, due cognisance of

early warnings on unauthorised network traffic and the

necessity of good post-incident crisis management.

Uttara Vaid and Mahesh Chainani then informed the

participants about the newly introduced Cyber Insurance

policy now available in the Indian market which effectively

combines many modules of providing indemnity for

(among other coverages)

• third party liability claims arising from a privacy

breach,

• data remediation expenses,

• business interruption losses arising from stoppage of

business activity after a major security breach of a

company’s IT system ,

• regulatory fines and penalties (wherever insurable

under law) and

• a host of Crisis management costs such as legal fees,

forensic investigation expenses , public relations

consultants’ costs

which are all claimable under the new Cyber Protection

policy.

The discussion ended with an active participation from the

audience who had many questions on the management,

regulatory compliance and transfer through insurance of

the newly emerging Cyber risk which threatens to severely

impact a company’s profitability and longevity without

effective risk management.

Panel Discussion on “Claims related to Ingestible products”

Panel Members:

- Ms. Jui Buch, Specialist Consultant and Advisor, Worckhardt Ltd.

- Mr. Ramneek Goyal, AVP-Liability Insurance, ICICI Lombard General Insurance

- Ms. Anisha Udeshi, Head- Insurance & Risk Management, Cipla Ltd. (Moderator)

- Mr. Pran Chandrasekhar, General Manager –Insurance, RPG Life Sciences and Ex-HUL

- Mr. Vibhaw Kumar, Sr. VP & Head –Liability Insurance, Howden

Insurance Brokers

The Panel highlighted the need for having an alignment of thoughts between Insured and Insurer at the time of policy conceptualisation, so as to ensure that a sound policy framework is in place when a claim arises. The panel discussed at length the strategy to be deployed by Insured, Insurer and the Intermediary at the time of a catastrophic product liability and product recall claim and the pitfalls that Insureds should specifically avoid when dealing with a major claim.

The Panel also deliberated on various case studies and the ways of managing the Product Liability Insurance Program in the most efficient manner, so as to respond to complex claims.

It was a lively discussion with the audience participating with their views and comments on the claims, including the legal view on claims and policy coverage.

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Organisers and Panelists at a glance