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Some Insurers Balk at Product Liability Coverage for DMAA Supplements

Filed July 3rd, 2012 Laurie

Two insurance companies that offer product liability coverage to the dietary supplement industry plan to add DMAA to their “ingredient exclusion” list, according to Greg Doherty, practice leader of the dietary supplement insurance division of Poms & Associates Insurance Brokers Inc.

“I predicted this over a year ago, and now it’s happening” Doherty said. “There has been too much negative press lately on DMAA, and eventually it was bound to catch the eye of some of the insurance company underwriters. Two carriers will now exclude it, although one has hinted that they may offer coverage for products containing DMAA on a ‘carveback’ basis, which means that based on the type of products being sold, the dosage of DMAA and the volume of DMAA sales as a percentage of overall sales, this carrier might offer DMAA coverage for an additional premium. The key word is ‘might.’”

According to Doherty, the more bad press ephedra alkaloids got, more “carvebacks” began offering coverage, but eventually excluded coverage entirely. Insurance companies that paid out millions of dollars for ephedra claims are haunted by that fact.

“As of right now, coverage is still available for DMAA products from other insurers, but my opinion is that the window is closing. It’s really the ephedra insurance coverage story all over again,” Doherty said. “Companies currently selling DMAA and want it to be covered in the future face a real dilemma. Because of the claims made nature of product liability policies for dietary supplement companies, the product you sell today will likely not produce a claim until some date in the future. If your future policy has a DMAA exclusion, and that claim rolls in, there won’t be coverage, even though the policy in your file today covers DMAA.”

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