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Cargo Stock Throughput Insurance for Life Science Companies
Linda Van Fossen
May 29, 2025
In the dynamic world of life sciences, companies face unique challenges in safeguarding their valuable assets. From pharmaceuticals to biologics, medical devices to vaccines, these products often require specialized handling and storage to maintain their integrity.
Cargo stock throughput (STP) insurance emerges as an important solution, offering broad coverage for physical loss or damage occurring anywhere in the supply chain. In this blog, we discuss what STP insurance is, how it helps life science companies address their challenges, and how tariffs affect the supply chain and STP insurance costs.
What Is Cargo Stock Throughput Insurance?
STP insurance is a specialized policy designed to protect companies' assets throughout the supply chain, anywhere in the world, from the point of origin through the final destination. It covers precursors, raw materials, work-in-progress, and finished goods, ensuring that products remain secure from manufacturing to final delivery. This type of insurance is particularly crucial for life sciences companies, as they have products that are often sensitive to temperature, light, humidity, and other environmental factors.
The insurance covers all modes of transportation, can be fully customized, and provides seamless coverage from the point of origin to the final destination, without the coverage gaps that might occur with traditional stand-alone cargo and property insurance policies.
A typical supply chain for a pharmaceutical company is shown below, as well as the steps covered by STP insurance:
Key Benefits of Stock Throughput Insurance for Life Science Companies
STP insurance policies are especially beneficial for life sciences companies as they offer:
- A Comprehensive Solution: STP protects against risks such as theft, tampering, transit risks, and exposure to extreme conditions, in one convenient policy.
- Loss Prevention Expertise: Insurers often offer guidance on best practices for packaging, labeling, and transportation/handling to minimize preventable losses.
- Flexibility: Policies can be tailored to address the specific needs of life science shipments, including temperature-controlled environments and specialized logistics.
Challenges Addressed by Stock Throughput Insurance
STP insurance can also help address the vulnerability of life science products, which include:
- Temperature fluctuations that can compromise efficacy
- Power outages affecting storage conditions
- Human errors in packaging or transportation
By mitigating these risks, STP ensures that companies can focus on innovation and patient care without worrying about supply chain disruptions.
An Important New Issue: Tariffs
While currently paused for pharmaceutical companies, tariffs and the uncertainty they bring are top of mind for life science companies. They can significantly impact transit insurance by increasing costs as well as altering a company's supply chain, risk management assessments, and strategic planning.
Increased Costs
Tariffs on medical devices, pharmaceuticals, and raw materials can raise production and transportation costs. For example, approximately 90% of drugs are generics. Generic drugs rely heavily on active pharmaceutical ingredients (API) from India and China and are particularly impacted. Approximately 80% of API for generics is produced in these countries, and while some larger companies may be able to onshore some of their production to avoid tariffs, it will undoubtedly increase costs. Meanwhile, smaller firms will have no choice but to pass on the increased cost to health insurers and consumers.
This leads to higher STP insurance premiums, as the value of goods in transit increases. It also could mean that current transit insurance limits are inadequate for many companies, and they may need to closely monitor and update their limits throughout the policy term. In the current climate, we recommend that you review your coverage needs with your insurance broker at least quarterly to stay on top of any adjustments you may need to make.
Supply Chain Disruptions
The life sciences industry relies heavily on global supply chains. Tariffs can cause delays, rerouting, and logistical challenges, increasing the risk of damage or loss during transit. This could potentially lead to an increase in the volume of claims, resulting in higher loss ratios and insurance premiums.
Impact on Strategic Planning
Production and procurement cost increases force companies to reassess pricing strategies or absorb costs, affecting profitability. Companies may need to re-evaluate their supply chains, possibly changing to suppliers located in countries with lower tariffs or moving their manufacturing facilities. This can lead to regulatory issues and delays in product approvals and certifications. Firms considering international expansion may rethink or delay expansion. Additionally, budgets may need to be prioritized, leading to delayed or shelved projects, stifling innovation. Some highly needed and anticipated new pharmaceutical and medical products may never see the light of day as the projects become too expensive to support.
To help ameliorate the situation, firms may explore joint ventures or partnerships with suppliers to have them produce their products in the US, or they may bring API manufacturing in-house. Strategic distribution agreements may also be used to minimize direct imports.
Life science firms need to balance these challenges while maintaining product quality, innovation, and compliance with health regulations. It becomes a game of agility and foresight to stay competitive in a tariff-impacted global market.
Why Stock Throughput Insurance Matters
For life science companies, the stakes are high. A single compromised shipment can lead to financial losses, missed milestones, and, most critically, interruptions in clinical trials or patient care. STP insurance not only protects assets but also reinforces the reliability and trustworthiness of the supply chain.
STP insurance is more than just a policy—it's a strategic investment in the resilience and success of life science companies. By addressing the unique challenges of this industry, STP insurance empowers businesses to navigate risks and deliver life-saving products with confidence.
Contact your Woodruff Sawyer team to learn more about a customized solution for your business or to review your current coverage. With all this uncertainty, you need a trusted advisor to keep your STP insurance in good order.
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