Pharmaceutical Manufacturing Insurance (UK Guide)

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Pharmaceutical Manufacturing Insurance (UK Guide)
Target keywords: pharmaceutical manufacturing insurance UK, pharma product liability insurance, GMP insurance, MHRA compliance insurance, product recall insurance
Pharmaceutical manufacturing is one of the most tightly controlled, high-stakes industries in the UK. You’re handling regulated products, complex supply chains, specialist equipment, temperature-sensitive materials, and strict quality systems. When something goes wrong, the impact isn’t just financial—there can be regulatory scrutiny, contractual disputes, reputational damage, and (in the worst cases) patient safety implications.
That’s why pharmaceutical manufacturing insurance isn’t a “tick-box” purchase. It’s a structured programme designed to protect your premises, people, products, data, directors, and your ability to keep trading when disruptions hit.
This guide breaks down the core covers UK pharma manufacturers typically consider, the risks insurers focus on, common exclusions, what drives premiums, and a practical risk-management checklist aligned to GMP and MHRA expectations.
Need a fast, sensible review? Call 0330 127 2333 or request a quote at https://www.insure24.co.uk/
  1. Who needs pharmaceutical manufacturing insurance? If you manufacture, process, package, label, store, or distribute pharmaceutical products in the UK, you’re likely to benefit from a tailored insurance programme. This includes:
  • API manufacturers (active pharmaceutical ingredients)
  • Finished dose manufacturers (tablets, capsules, liquids, injectables)
  • Contract manufacturers (CMOs) and contract development and manufacturing organisations (CDMOs)
  • Packaging and labelling facilities (including serialisation/track-and-trace operations)
  • Cold chain storage and distribution (GDP-aligned warehousing and logistics)
  • R&D and pilot plants scaling from lab to production
  • Pharma wholesalers and regulated distributors with storage/handling exposures
  • Specials manufacturers and compounding operations (where applicable)
Even if you outsource parts of production, you may still carry liability through your contracts, your brand, and your regulatory responsibilities. Insurance is one layer of resilience alongside quality systems, supplier controls, and robust documentation.
  1. Key risks in pharmaceutical manufacturing (UK) Pharma risk isn’t just “fire and theft.” Insurers look at how a single incident can cascade into multiple losses: stock write-offs, downtime, recall costs, third-party injury claims, regulatory response, and contractual penalties. Common risk themes include:
2.1 Contamination and quality failures Cross-contamination, mix-ups, out-of-spec batches, sterility failures, or packaging/label errors can trigger batch destruction, rework, and recall. Even where no one is harmed, the commercial impact can be severe.
2.2 Temperature excursions and cold chain breakdown Biologics and temperature-sensitive products can become unusable after short excursions. Losses often include not just the product value, but disposal, investigation, and replacement logistics.
2.3 Equipment breakdown and utilities failure Autoclaves, HVAC, cleanroom systems, chillers, compressors, filling lines, and specialist reactors are critical. A breakdown can halt production, compromise in-process materials, and create extended lead-time issues for parts.
2.4 Fire, explosion and chemical hazards Solvents, powders, pressurised systems, and reactive chemicals increase fire/explosion potential. Dust explosion risk can be relevant in certain processes.
2.5 Regulatory action and compliance pressure MHRA inspections, CAPAs, deviations, and documentation expectations create operational and reputational exposure. While insurance doesn’t replace compliance, it can help manage certain financial consequences of insured events.
2.6 Product liability and recall Claims can arise from adverse events, incorrect labelling, contamination, or failure to meet specifications. Recalls can be voluntary or mandated, and often require rapid coordination.
2.7 Cyber and operational technology disruption Manufacturing environments increasingly rely on connected systems (ERP, LIMS, SCADA/OT). Ransomware or system failure can stop production, corrupt records, and create compliance headaches.
2.8 Supply chain disruption Single-source APIs, long lead-time components, and specialist packaging can make you vulnerable to supplier failures, transport delays, or geopolitical shocks.
  1. Core covers explained (and what they’re for) Most pharmaceutical manufacturing insurance programmes combine several policies. The right structure depends on your operations, contracts, and risk profile.
3.1 Property insurance (buildings, plant, stock) What it covers: Physical loss or damage to buildings, contents, plant and machinery, and stock (subject to terms) from insured events such as fire, flood, storm, escape of water, theft, and more.
Pharma-specific considerations:
  • Sum insured accuracy: buildings, tenant improvements, specialist plant, and high-value equipment
  • Stock valuation: raw materials, work-in-progress, finished goods, and packaging components
  • Temperature-controlled stock and whether temperature excursion is covered (often needs specific wording)
  • Cleanroom reinstatement complexity and lead times
  • High hazard processes and solvent storage arrangements
3.2 Business interruption (BI) What it covers: Loss of gross profit/revenue and increased cost of working following insured property damage that interrupts your business.
Why it matters in pharma: Downtime can be prolonged due to validation, cleaning, requalification, and regulatory expectations. The key is selecting an appropriate indemnity period (often 12–24 months, sometimes longer for complex sites).
Common BI extensions to consider:
  • Denial of access (e.g., police cordon after nearby incident)
  • Public utilities failure (electricity, water, telecoms)
  • Supplier/customer extensions (contingent BI)
  • Loss of attraction / notifiable disease (more relevant to certain operations than others)
3.3 Employers’ liability (EL) What it covers: UK employers are legally required to carry EL (typically £5m minimum, commonly £10m). It covers claims from employees who suffer illness or injury arising out of their work.
Pharma exposures: Chemical exposure, respiratory sensitisation, repetitive strain, slips/trips, manual handling, and lab/manufacturing hazards. Insurers may ask about COSHH assessments, training, PPE, and incident history.
3.4 Public liability (PL) What it covers: Claims from third parties (visitors, contractors, members of the public) for injury or property damage linked to your premises or operations.
Typical scenarios: Visitor injury on-site, contractor damage, or accidental release causing third-party property damage.
3.5 Product liability (pharma product liability insurance) What it covers: Claims alleging your product caused injury, illness, or property damage. In pharma, this can be complex and high severity, even if claims are rare.
Key points to check:
  • Territory/jurisdiction (UK only vs worldwide, including USA/Canada)
  • Who is insured: manufacturer, brand owner, contract manufacturer, subsidiaries
  • Contractual liability and indemnities in supply/CMO agreements
  • Clinical trials exposures (may require separate cover)
  • Retroactive dates and run-off needs for discontinued products
3.6 Product recall insurance (and recall-related costs) What it covers: Recall policies can cover certain costs associated with recalling products from the market, such as notification, shipping/collection, disposal, and sometimes crisis management. Some wordings also address accidental contamination or malicious tampering, depending on the product and risk profile.
Important: Recall cover is not automatically included in standard liability policies. If recall is a meaningful exposure for you, it’s worth addressing directly.
3.7 Clinical trials insurance (where relevant) What it covers: If you sponsor or conduct clinical trials, you may need dedicated clinical trials liability to cover injury to participants and related legal costs, aligned to trial protocols and contractual requirements.
When it applies: Sponsors, CROs, and manufacturers involved in investigational medicinal products (IMPs) may have trial-related responsibilities. Requirements vary by trial design, location, and contracts.
3.8 Marine cargo / goods in transit What it covers: Loss or damage to goods while in transit (road, sea, air) and sometimes in temporary storage, depending on the policy.
Pharma-specific considerations:
  • Cold chain transit and temperature monitoring requirements
  • High-value shipments and theft risk
  • Incoterms and who bears risk at each stage
  • Use of approved couriers and validated packaging
3.9 Cyber insurance What it covers: Cyber policies can include incident response, data breach costs, business interruption from cyber events, ransomware response, and third-party liability.
Why it matters in pharma manufacturing: Disruption isn’t just IT inconvenience—loss of system availability or integrity can halt production, corrupt records, and create compliance headaches. Insurers often ask about MFA, backups, patching, segmentation, and incident response planning.
3.10 Directors’ & Officers’ (D&O) insurance What it covers: Protection for directors and officers against claims alleging wrongful acts in managing the company (e.g., regulatory investigations, employment disputes, shareholder claims).
Why it’s relevant: Highly regulated environments can increase scrutiny and the cost of responding to allegations, even where no wrongdoing is proven.
3.11 Environmental / pollution liability What it covers: Certain policies cover sudden and accidental pollution events, and in some cases gradual pollution (depending on wording), including clean-up costs and third-party claims.
Pharma considerations: Chemical storage, waste handling, effluent, and spill response procedures are key underwriting topics.
3.12 Equipment breakdown (engineering insurance) What it covers: Sudden and accidental breakdown of insured machinery (and sometimes resulting damage), plus optional business interruption from breakdown.
Why it’s valuable: Many critical failures aren’t “fire” or “flood”—they’re mechanical/electrical breakdowns. Engineering cover can be a practical way to address that gap.
  1. Common exclusions and limitations to watch Insurance is powerful, but it’s not a substitute for GMP, quality systems, or contractual discipline. Common exclusions/limitations (vary by insurer and wording) can include:
  • Known defects or issues you were aware of before policy inception
  • Wear and tear, gradual deterioration, poor maintenance (especially relevant to equipment)
  • Faulty workmanship or defective design (often limited; resulting damage may be treated differently)
  • Product efficacy issues where there’s no injury/property damage (depends on wording)
  • Recalls not triggered by insured causes (recall often needs dedicated cover)
  • Contractual penalties and liquidated damages (often excluded)
  • Cyber exclusions on traditional policies (another reason cyber insurance matters)
  • Pollution exclusions on standard liability policies (environmental cover may be needed)
  • Temperature excursion limitations unless specifically endorsed
  • USA/Canada exposure restrictions if you sell into those markets
The practical takeaway: don’t assume “it’s covered” because you have a policy. Match the wording to your actual risk profile and contracts.
  1. What affects the cost of pharmaceutical manufacturing insurance? Premiums are driven by a mix of your exposures, your controls, and your claims history. For pharmaceutical manufacturing insurance UK, insurers typically look at:
  • Turnover and product mix (including high-risk categories)
  • Territories and jurisdictions (UK/EU vs worldwide; USA exposure is a major factor)
  • Manufacturing processes (sterile vs non-sterile, solvents, powders, high containment)
  • Quality systems maturity (GMP compliance, deviation/CAPA management, audit outcomes)
  • MHRA inspection history (and how issues were resolved)
  • Facility construction, fire protections, compartmentation, and housekeeping
  • Business continuity (redundancy, alternative sites, critical spares, supplier resilience)
  • Cold chain controls (monitoring, alarms, response procedures, validation)
  • Security (theft prevention for high-value stock)
  • Cyber posture (MFA, backups, segmentation, patching, incident response)
  • Limits and deductibles selected (and indemnity period for BI)
If you’re trying to reduce cost without weakening protection, the best route is usually improving risk controls and presenting them clearly to insurers—rather than simply stripping cover.
  1. Risk management checklist (GMP, MHRA, ISO and supply chain) Insurers like well-run sites because good controls reduce both frequency and severity of losses. Here’s a practical checklist you can use to pressure-test your risk profile and support better terms.
6.1 GMP and quality systems
  • Documented GMP procedures with version control and training records
  • Deviation management with root cause analysis and CAPA tracking
  • Batch record integrity controls (including electronic records where used)
  • Change control for equipment, processes, suppliers, and packaging
  • Cleaning validation and contamination control strategy
  • Environmental monitoring (where applicable) and trending
  • Supplier qualification and incoming goods testing/verification
6.2 MHRA readiness
  • Inspection readiness plan and evidence of closure of prior observations
  • Clear responsibilities for QA/QP functions (where relevant)
  • Complaint handling and pharmacovigilance interfaces (if applicable)
  • Recall plan with roles, contact lists, and rehearsal/testing
6.3 ISO and information security
  • ISO 9001/13485 alignment where relevant to your operations and customers
  • Cyber Essentials/ISO 27001-style controls: MFA, least privilege, patching, monitoring
  • Offline/immutable backups tested for restore
  • Segmentation between IT and OT where feasible
6.4 Property protection and engineering resilience
  • Fire risk assessment up to date; hot works controls; housekeeping standards

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