August 21, 2017 (656) 535-1409gdoherty@bolton.co
Greg Doherty
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State of the Industry Review & Outlook for 2016

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From our vantage point, as insurance brokers for the industry, the trend for lower product liability insurance premiums continues, which has a “good news, bad news” aspect to it. The good news is insurance costs are decreasing, which is good for the bottom line. How much lower prices can go is problematic, however; in the past 10 years the prices have decreased about 80%, by all measures.

The bad news is that carriers are sneaking in exclusions and other coverage limitations that are often buried deep in the policy, and not disclosed at the time of purchase. Certainly insurance companies are allowed to craft limitations to their coverage—limitations that are directed squarely at the supplement industry. The issue, however, is transparency, and often the disclosure necessary to make good buying decisions is not evident in the insurance supply chain.

Large retailers continue to slowly but surely raise the liability insurance requirements for their supplement suppliers, as evidenced by KeHe Distributors’ recent move to require a minimum of $5 million of coverage. Supply chain contracts, encouraged by many in the industry, are another challenge, as sometimes they contain insurance provisions that are difficult and occasionally impossible to comply with.

Finally, we have seen the return of DMAA into the sports nutrition arena. After the DMAA dust-up of a few years ago, all of the product liability insurers added DMAA to their excluded ingredients list. If DMAA becomes popular again, its insurability will be tentative at best. The media has so vilified DMAA that even if it is insurable, it’s debatable whether the mass drug and other chains would put it back on their shelves.

—Greg Doherty, Managing Director Dietary Supplement Practice Group, Bolton & Company

– See more at: http://www.nutraceuticalsworld.com/issues/2015-12/view_features/state-of-the-industry-review-outlook-for-2016#sthash.CGJ01Q2f.dpuf

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