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Liberty Mutual a key insurer for Purdue Pharma, court filings show 

Narcotic drugs (opioids)

Liberty Mutual is a key provider of casualty insurance to Purdue Pharma, the now-bankrupt drug company at the centre of the US opioid crisis.

Purdue filed for bankruptcy on Sunday, crushed under the weight of 2,600 lawsuits from states, municipalities, Native American tribes and healthcare providers concerning opioid sales. The filing came after talks of a possible $12bn settlement reached an impasse.

Contained in the company’s bankruptcy filings is a description of Purdue’s insurance arrangements, suggesting what insurers might potentially be on the hook for significant opioid-related claims.

According to filings reviewed by The Insurance Insider, Liberty Mutual covers the company for general liability and excess casualty cover, in policies which expire on 1 October. It paid $3.2mn in annual premiums in 2018 for policies set to expire next month.

The company is now struggling to renew its casualty insurance, according to the filings. Purdue is looking to set up a captive to give it the minimum cover needed to fulfill commercial contracts that require a minimum of $10mn in product liability cover and $27mn in general liability insurance.

“A commercial solution to the debtors’ product and general liability coverage requirements has been challenging to obtain with a third-party insurer,” lawyers for the company said in a filing on Monday.

“The debtors are therefore in the process of evaluating captive options to insure the Debtors’ product and general liability risks”, the filing says.

Marsh has served as the company’s broker. Lawyers for Purdue wrote that they believe it is in creditors best interest for the “business relationship with the broker” to continue.

Professional lines and cyber coverage is supplied by Zurich and Tokio Marine HCC, all of which renew at the start of October. The company’s directors’ and officers’ (D&O) cover is provided through a captive cell structure, based in Bermuda, linked to JLT, called Isosceles.

Chubb provides umbrella liability to the Purdue, with AIG providing product liability. Liberty division Ironshore provides product and operations liability to Purdue’s generics business Rhodes Associates. 

The pharmaceutical firm also has property and marine coverage from FM Global, which is set to expire on 29 October, but those are less likely to be impacted by the opioid claims.

Opioid addiction related claims have become a substantial concern for insurers. The drugs are alleged to have contributed to 47,000 deaths between 2017 and 2018, according to data from the US Centers for Disease Control and Prevention.

Coverage for opioid-related claims has been a contentious issue for some insurers. Grocery chain Giant Eagle for example is suing Axa XL and Zurich for failing to cover litigation costs after it was named in lawsuits over its distribution of the drugs through its pharmacies.

Purdue is owned by the Sackler family. The New York Attorney General’s office has accused the family of funneling $1bn out of the US through offshore bank accounts.

A representative for Liberty Mutual declined to comment.

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