FOR IMMEDIATE RELEASE
(Los Angeles): In just a matter of weeks word seems to have spread among dietary supplement product liability insurers that DMAA, the controversial ingredient in many pre-workout sports nutrition products, is something they no longer wish to insure.
Greg Doherty, Practice Leader of the dietary supplement insurance division of Poms & Associates Insurance Brokers, Inc, today announced that effectively all of the marketable companies offering product liability coverage to the dietary supplement industriousness will now be adding a DMAA exclusion to their respective "ingredient exclusion" lists.
As late as June of this year, less than a handful of two or three insurers were adding a DMAA exclusion.
"It's pretty amazing how fast this happened" says Doherty. "It appears that the April warning letters to ten DMAA product suppliers must have caught their eye all at the same time. Once that happened they began to do some digging and found the other negative information about DMAA, and decided it was time to protect themselves with a DMAA exclusion." A carrier that in June gave notice that it may have offered coverage for products containing DMAA on a "carveback" basis, which means that based on the type of products being sold, the measure of DMAA and the amount of DMAA sales as a percentage of overall sales, this carrier may possibly not attach a DMAA exclusion for an additional premium. In spite of this, based on a recent interaction with that carrier, Doherty says that this possibility appears to have evaporated as well.
The sudden appearance and adoption of a DMAA exclusion is a scenario mirroring the ephedra alkaloids ban in 2004. Notes Doherty, "First the insurance companies stop covering it, then the government issues their outright ban on those products. Subsequently, the insurance companies paid out millions of dollars for ephedra claims. Will a government ban and insurance claims follow this time? Only time will tell if the there are massive insurance claims and if the DMAA exclusion possibly should have been issued sooner, at least from the perspective of the insurance companies."
As of this moment there are still two carriers available who apparently have not caught on to the wave of adding a DMAA exclusion. But Doherty adds, "I can't simply go to them and ask why they haven't added a DMAA exclusion yet."
Proposition 65 Liability Insurance Withdrawn From Market
Approximately an entire year to the day after being announced, insurance covering false advertising (including Prop 65 claims) has been withdrawn from the market and is no longer available.
Doherty notes, "It's my understanding that very few policies were purchased, probably because the cost was quite high. And, many people have the attitude that it's not going to happen to them, so why buy insurance? We were only able to get one customer to complete an application and give them a quote, and it was about as expensive as their product liability insurance. They didn't buy it. Interestingly, the coverage also provided true false advertising coverage, and prior to that there was no such thing. Now we've come full circle, just as we are seeing a plethora of new false advertising class actions being filed on both the food and dietary supplement industries."