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2. Government restricts by contract and lcgislation the liability
of manufacturers to failure to manufacture vaccine according to
specifications. 2. Individual manufacturer purchases insurance to cover this retained
liability only when government successfully asserts failure to perform. Coverage estimated at $75 million can be layered - and
price can bc ncgotiated.
3. Industry offers to provide claim investigation service for third
E'I 'ISF B
FORP7191 15911 THE DETAILS OF THE FRO FOSHL IS INI ILISLE FROM ari 19717718 !I'SIRICI ASSOCIATION, FROM T'E MANUFACTURERS, 11:0 R?? THE DEF1:2712!T. 15 CHAIRM?! RG3S 11' OTIER S13ERS OF TIS COMMITTEE MICE FL.1!M .37 E1RIMIS 21. i!!S SI'BJECT HIELO LAST YEEY, THE FEDERL COVERAE1T YTECTS TI'S 11 DISTRY VILL BE 33LS TO PARTICIPATE IN PROVIDING 19!?1109 "F!S PR73?1M. WHILE TIE COMMITTEE, OF C003392, 21S AOT AD Alin PMATINITY TO REM13'! THE SPECIFIC 72973 SAL 1402 TO YO!... IV17TilT TIE CHAIRMAN GREES NITI ME THAT YOUR IMEDIATE RESPONSE DIT IS ESSE!T11:
DAVID MATHEIS SECRETARY DEPARTIENT OF HEALTH EDICTION *JEL FARE
The following modifications to the standard ISO policy will be made: 1. The definition of occurrence will be changed to provide that
occurrence means an innoculation of swine flu vaccine (as
defined) manufactured by a named insured. 2. A definition of swine flu vaccine will be provided. These two changes when read in the light of the insuring agreement will restrict the policy to innoculation of swine flu vaccine. 3. The named insureds shall be the four (4) manufacturers and the
policy will be endorsed to provide coverage for the employees
of the four (4) manufacturers.
modified to delete the words "during the policy period."
arising from an innoculation during the policy period.
occurrences (innoculations) within the policy period.
lowing substituted therefor: Regardless of the number of (1)
expenses and unallocated expenses.
The premium for this policy shall be the deposit premium plus
be cancelled by the insurers by giving 30 days cancellation
SWINE FI.U VACCINE PROGRAM
We are enclosing a proposal for Insurance to provide coverage for the four manufacturers. This proposal differs as you will note from any previous forms, and it has been drafted to provide the undeitiriters with a profit potential for exposing their limits of liability. The policy will be on a quota share subscription form with each underwriter signing for their percentage of participation. It is contemplated using the standard ISO policy
form with the attached modifications.
It is anticipated that many claims will be subject to subrogation against the government, relying upon the contract between HEW and the manufacturers delineating the responsibilities of each.
The rating formula is as follows:
$50,000,000 AGGREGATE LIMIT FOR THE PROGRAM
The premium for the policy is the deposit premium ($2,000,000.) plus an amount equal to 120% of that portion of loss which includes sums paid as damages and
as allocated claim expenses and 100% of sums paid as unallocated claim expenses.
The premium so determined is subject to a minimum of $2,000,000. and up to a maximum of $40,000,000.
SWINE FLU EXCESS
Each manufacturer will also require a policy in the amount of $50,000,000 aggregate limit, including losses and loss expenses, in excess of the primary $50,000,000 aggregate policy issued to the four manufacturers jointly.
This excess policy will apply only for liability which may remain with the manufacturer under the attached contract which each manufacturer has with HEW. The specifications for manufacturing and distribution of the product are established by the government and the government's action against any manufacturer can only be for reimbursement of losses which the government has paid to third parties arising out of a manufacturer's failure to comply with such specifications.
The premium for each of these individual policies will be a flat charge of $375,000. The policy will be on a quota share subscription form with each underwriter signing for their percentage of participation. We expect each underwriter will participate in these excess contracts as well as the primary program.