Life Sciences Contractors & Supply Chain
Outsourcing a task changes who performs it; it does not automatically transfer the legal or insurance exposure. The map of who fails, and who pays when they do, is the real risk register.
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The Tank take
Life sciences businesses should map every critical contractor and supplier by task, country, contract, insurance, quality evidence, audit rights, indemnity and replacement plan. Cover for your vicarious liability is not the same as making a contractor an insured.
Weak recourse, uninsured overseas manufacturers, broad waivers and unclear quality or recall responsibility can leave the local business carrying more of a loss than its operational model suggests. Underwriters read the supply chain the same way a plaintiff's lawyer does.
Four provider types, four failure modes
Start with the outside party whose failure could cause the largest patient, product, trial, data or continuity loss.
Specifications, change control, batch release, audit rights and recall cooperation need to be documented while the relationship is healthy. After a defect, the contract you have is the contract you get.
Delegated trial, sample and data tasks need clear scope, standards, indemnities and insurance. See the CRO vs sponsor vs site map for how trial responsibilities distribute.
Territory, storage, cold chain, customer records and complaint escalation shape both product loss and the feasibility of a recall. A distributor who cannot tell you where the batch went makes every recall bigger.
Cloud, model, API and platform dependencies create privacy and correlated interruption exposure. Dependent-system cover responds only to the providers actually specified.
What to hold on every critical provider
Underwriters and claims teams both ask for the same file. Building it before the loss is the cheap option.
- 01
The critical task each contractor or supplier performs
- 02
Due diligence, qualification and audit evidence
- 03
Indemnity, insurance and recourse provisions in the agreement
- 04
Any waivers of subrogation or liability caps, assessed for acceptability
- 05
Who owns quality, complaints, adverse events, recall and regulatory notification
- 06
The replacement and continuity plan if the provider fails
Vicarious liability is not contractor cover
A policy that covers your vicarious liability for a contractor's work protects you when you are sued for their failure. It does not protect the contractor, and it does not mean their failure is insured - it means your share of the blame is. Whether the contractor can pay their share depends on their insurance and your recourse.
This is why supplier insurance certificates, batch testing and written quality controls materially affect insurer comfort on product risks: they evidence that the other parties in the chain can carry their own weight. In Tank's placement experience, recourse quality has repeatedly been the difference between a product risk that progresses and one that stalls.
The same logic runs through the manufacturer, importer and brand owner analysis: the claim lands where enforcement is easiest, and insurance follows the same gravity.
Related life sciences guides
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Questions about Contractors & Supply Chain
No. Cover for the insured's vicarious liability is different from making every contractor an insured. The policy and the contract both need to be checked.
Appropriate products, public, professional, recall, property or cyber cover depending on its task, with limits and territorial scope that match where your products actually go.
A provision restricting an insurer's ability to recover from another party after paying a claim. It can affect appetite or require insurer agreement, so it should be flagged before binding, not after.
They document specifications, controls, audit rights, change management, records and responsibility when products or processes fail. They are the difference between an allocated loss and an argument.
General information only. This page does not take account of your objectives, financial situation or needs and is not legal advice. Cover depends on the insurer, policy wording, limits, excesses, exclusions and information disclosed. Read the relevant policy documents and obtain professional advice before deciding.
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Tell us what you research, build, test, supply or operate, plus any overseas exposure. We will explain the available terms and exclusions before you decide.