International companies looking to enter the dietary supplement market in the U.S. have a long and winding road to navigate. Negotiating the maze of laws and regulations enforced by federal and state agencies can be a daunting proposition. A subset of these difficulties involves securing the insurance—product liability, principally—that will satisfy potential U.S. customers and let company principals sleep at night, knowing our litigious system. This article will examine the insurance and regulatory challenges companies face.
There are two categories of international companies we see that are interested in insurance protection for U.S. operations. Companies that 1) are already insured in their home country, with an insurer domiciled in that country, and 2) are not insured at all (not uncommon).
For those in the first category, the question that often first arises is: “will this policy cover us for sales/operations in the U.S.?” Generally the answer is no. Certain obstacles exist that make this the case. The foreign insurer is not licensed to do business in the U.S. and thus can’t legally offer coverage to anybody; therefore, customers of the company entering the U.S. will not accept a foreign insurer as evidence of insurance. In addition, many foreign insurers’ policies we have seen specifically exclude coverage for claims arising in the U.S. and/or for products sold there. The company with no insurance faces the same obstacles.