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NEW YORK—Marsh Inc. and Allied World Assurance Co. Holdings A.G. announced the launch of its responsible corporate officer doctrine coverage in a statement Tuesday.
Called RCO Corporate Response, the new service targets executives in the life science, pharmaceutical and health care industries who may be vulnerable to prosecution under the responsible corporate officer doctrine. Under a 1943 Supreme Court ruling, corporate officers can be found liable if a company is found violating the Food, Drug and Cosmetic Act.
Even if executives have no knowledge of any mismanagement or contamination of drugs, they can be fined, imprisoned or excluded from federal health care programs, such as Medicaid.
Coverage will reimburse for losses
Coverage will reimburse for losses from being prosecuted, from being barred from the federal health care system, and from recovering some of the executive’s annual salary.
“Not only is responding to such enforcement actions expensive and time consuming, executives who neither participated nor had knowledge of alleged wrongdoing are at increased risk of being criminally prosecuted, losing personal income and facing a potentially career-ending event,” said Maureen Gorman, senior vp within Marsh’s FINPRO practice. “RCO Corporate Response is designed to protect these executives from the financial impact that can ensue from such enforcement actions.”
Coverage will be tailored depending on the size and need of each client. The maximum policy coverage of $15 million is available on a primary basis.
For additional information, contact Jack Flug, managing director of the FINPRO practice at Marsh, at 212-345-6493 or email@example.com, or contact Tom Kennedy, senior vp-professional lines at Allied World, at firstname.lastname@example.org.
Executive liability, natural catastrophes and benefit financing issues can bedevil companies of all sizes. But when disaster strikes, middle-market companies can actually find themselves more prone to devastating losses than large, multibillion-dollar firms, which typically are better positioned to absorb the damage.