Insurance for Life Sciences CROs & CMOs: Coverage Essentials for Research, Trials & Supply Chain Risk
Contract research organizations (CROs) and contract manufacturing organizations (CMOs) are pivotal players in the life sciences industry, helping bring new drugs, therapies, and medical devices from concept to market. Because of their complexity and exposure, these companies require highly specialized protection. It all begins with contract research organization insurance and contract manufacturing organization insurance that’s built around their operational and regulatory realities.
What Makes CROs and CMOs Unique?
While CROs focus on research, clinical trials, and regulatory support, CMOs provide outsourced manufacturing solutions. Some companies blend both functions, operating as CDMOs. Regardless of the structure, each faces a high-risk environment shaped by strict oversight, third-party partnerships, and high financial stakes.
These organizations often manage sponsor-owned intellectual property, handle sensitive health data, and work under pressure to meet regulatory standards like FDA Good Clinical Practice (GCP) or Good Manufacturing Practice (GMP). Delays, errors, or data breaches can result in costly disruptions, legal exposure, or reputational damage.
Insurance Policies CROs and CMOs Can’t Ignore
The right insurance strategy goes beyond standard business coverage. Here are the essential policies.
Directors and Officers (D&O) Liability
D&O insurance protects the directors and officers as business and growth decisions are made. This coverage is crucial in protecting the entity and the leadership, especially as future mergers or acquisitions can occur.
Clinical Trial Liability Insurance
Fundamental for CROs, this insurance covers bodily injury or death experienced by trial participants. It’s typically required before trials can begin. Policies may also include medical expense coverage and defense against claims, even those without proven negligence. The FDA’s guidance on informed consent underscores the importance of liability protections in the clinical setting.
Errors and Omissions (E&O)
E&O insurance helps shield both CROs and CMOs from claims of professional negligence. For example, it may cover protocol deviations or failure to meet sponsor expectations.
Product Liability
This coverage is critical for CMOs responsible for manufacturing or packaging. If a batch is compromised or a product defect causes harm, this insurance helps absorb the financial impact.
Cyber Liability Insurance
Cyber liability addresses the risk of data breaches and ransomware attacks, which have increased in healthcare-related industries. According to the HIPAA Journal, in 2023, 725 data breaches were reported to the Office of Civil Rights, with over 133 million records exposed or disclosed without permission.
Business Interruption and Property Insurance
These coverages help organizations recover from physical loss or operational downtime — whether from lab fires, cleanroom outages, or critical supply delays.
Meeting Sponsor and Regulatory Demands
Many sponsors set strict contractual requirements, including minimum liability limits and defined insurance types. This practice is especially common for U.S. government contracts or global pharmaceutical partnerships. Clinical research liability insurance is often specified in trial agreements to protect all parties involved.
Staying aligned with regulatory expectations — including those from the FDA, EMA, or other global bodies — is essential for compliance and business continuity.
Building a Resilient Insurance Strategy
Risk is inherent in innovation, but a proactive insurance approach can minimize its impact. Start by working with a broker who understands the biotech and life sciences sector. Moody brings deep industry experience to assess your specific exposures, from protocol deviation to logistics failure, and help build an evolving, responsive coverage portfolio.
As your operation scales or takes on new contract types, your insurance should scale with it. Routine policy reviews and contract-driven adjustments ensure your protection stays relevant.
Insuring What Drives Discovery
CROs and CMOs play a vital role in bringing scientific breakthroughs to life. That responsibility deserves equally robust protection. At Moody, we understand the pressures and priorities unique to life sciences firms. Our team builds tailored insurance strategies for organizations navigating everything from clinical oversight to global distribution risks.
Contact Moody Insurance Worldwide today to schedule a custom review of contract research organization insurance and contract manufacturing insurance for your CRO or CMO. Let’s help you stay protected and stay focused on the next breakthrough.
About Moody Insurance Worldwide
We are a specialized, independent insurance agency that provides all types of business insurance for the life sciences and medical technology industries. In addition to essential Property, Liability, and Benefits insurance, we have expertise in Professional Liability, Product Liability, Director & Officer Liability, and International insurance coverage.