Insurance Coverage for Dietary Supplement Companies & Regulations Brokers Should Know

Thanks to growing consumer interest in products designed to support a healthy lifestyle, the dietary supplement industry has enjoyed steady growth over the past decade. While supplement companies are enjoying a booming business, selling these products is not without risk. As an insurance broker who is familiar with the way dietary supplements are regulated in the U.S., you can help your clients avoid fines, lawsuits, recalls, and other adverse actions that can hurt their business—all while making sure they get the best possible pricing and insurance coverage for dietary supplement companies.

What Are Dietary Supplements?

As their name implies, dietary supplements are products intended to supplement our diets. Unlike medicines, which must be proven safe and effective before they can be marketed to consumers, supplements are regulated by the U.S. Food and Drug Administration as foods. Common dietary supplements include minerals such as calcium; botanicals and herbs, such as echinacea and ginger; amino acids such as tryptophan, and probiotics.

What are the Risks of Dietary Supplements?

Even though they’re intended to improve our health, supplements are not without risk. Some supplements can interact with certain medications, or interfere with laboratory tests. Dietary supplements can be especially harmful when people take several different kinds, ingest too many at once, or use them to replace prescribed medications.

How Are Dietary Supplements Regulated?

Dietary supplements are not intended to treat, diagnose, prevent, or cure diseases—that’s the role of medications—so they aren’t subjected to the same safety and effectiveness requirements that drugs are. Many people are surprised to learn that dietary supplements can be offered to consumers even if they haven’t yet been proven safe and effective.

So what is the FDA’s role? To answer that, we need to look to a set of laws passed in 1938: the U.S. Federal Food, Drug, and Cosmetic Act. The FD&C, as the act is commonly known, gave the federal agency authority to oversee the safety of food, drugs, medical devices, and cosmetics. A 1994 amendment, the Dietary Supplement Health and Education Act, or DSHEA, clarified the FDA’s role in regulating the supplement industry by defining the term “dietary supplement,” as well as the agency’s authority regarding these products.

Under existing law:

• The FDA does NOT have the authority to approve dietary supplements for safety and effectiveness, nor does it have the authority to approve their labeling, before supplements are sold to the public.
• It is the responsibility of dietary supplement companies, not the FDA, to ensure that their products meet safety standards and are not otherwise in violation of the law.
• Supplement labels are required to include nutrition information in the form of a “Supplement Facts” panel that includes the serving size suggested by the manufacturer, the number of servings per container, a listing of all dietary ingredients, and their amounts per serving. A statement on the front of the product’s packaging identifying it as a dietary supplement is also required, though similar terms, such as “herbal supplement” are allowed.

Although supplements aren’t subjected to clinical trials before they’re sold to the public, the FDA does regulate them once they are on the market by:

• Monitoring marketing claims. The FDA reviews product labels and other labeling information, including websites, to ensure that products are appropriately labeled and that they do not include claims that may render the products drugs (for example, claims to treat, diagnose, cure, or prevent diseases).
• Reviewing and approving the introduction of new ingredients to the market by affirming generally recognized as safe (GRAS) status, or as new dietary ingredients (NDI).
• Monitoring adverse event reports and other product complaints submitted by health care professionals, consumers, or supplement companies themselves.
• Auditing manufacturing facilities to make sure they follow good manufacturing practices (GMPs), which the FDA established and state that dietary supplements must:
  • be produced in a quality manner
  • not contain any contaminants or impurities
  • be labeled with the ingredients that are in the product.

When it comes to ensuring safety, effectiveness, and quality, GMPs are perhaps one of the most critical areas of regulation.

It’s important that you and your clients are also aware that, like the FDA, the Federal Trade Commission (FTC) requires supplement product information to be truthful. (The FTC is tasked with monitoring advertising claims).

What Happens if a Problem with a Dietary Supplement Product is Discovered?

If a dietary supplement doesn’t comply with the law or is found to be unsafe, the FDA can:

• Work with the company to bring the product into compliance
• Ask the company to voluntarily recall the product
• Take action to remove the product from the market.

Note that supplement manufacturers are expected to report harmful effects to the FDA. Admiral offers sub-limited product recall insurance coverage for dietary supplement companies if the FDA orders a mandatory recall of a company’s product.

Bottom Line

Different ingredients, manufacturing processes, and marketing tactics used by the supplement industry can present various types of exposures for your customers, especially if they are new to the industry and unfamiliar with current regulations. Knowing how your insureds’ products are being regulated will help cement your role as a trusted adviser—someone your customers can count on to keep their businesses protected.

Insurance for Dietary Supplement Companies

Our dedicated national underwriting team at Admiral has exceptional expertise in health, nutrition and lifestyle products. Not only do we understand the risk exposures, and know what to look for when helping brokers write coverage — we also know what nutrition companies need, and are able to provide a full range of insurance solutions in addition to product liability insurance for dietary supplements.

If you are a wholesale broker in need of an insurance partner with deep expertise in nutraceuticals and dietary supplements, contact us to become an appointed broker. If you are a retail insurance broker with clients that include medical device manufacturers and distributors, we urge you to connect with one of our wholesale partners.

Products and services described above are provided through various surplus lines insurance company subsidiaries of W. R. Berkley Corporation and offered through licensed surplus lines brokers. Not all products and services may be available in all jurisdictions, and the coverage provided by any insurer is subject to the actual terms and conditions of the policies issued. Surplus lines insurance carriers do not generally participate in state guaranty funds and insureds are therefore not protected by such funds.