WASHINGTON-A group of biotechnology companies have agreed to form a captive insurance plan to help them cope with the rising cost of liability insurance.
The captive plan will give participating companies both product liability and directors and officers' coverage, explained Jeffrey Gibbs, associate general counsel for the 175-member Association of Bio technology Companies. It will provide the 24 companies now interested in the plan with an aggregate limit of $2.5 million in liability coverage, a figure that will rise as more companies join.
The company will be incorporated in Vermont because of favorable tax laws in that state. Partici pants are expected to seek bids for underwriting the plan early next year and will compare them to the cost of self-insurance.
Regardless of the approach chosen, each participating company will pay considerably less than it would for individual coverage, Gibbs estimated. Firms will pay ac cording to the risk posed...