Are Psychedelics a Big Insurance Opportunity? | Insurance business America
“These companies will need insurance,” says the CEO
technology
By Daniel Wood
The world faces enormous challenges, from climate change to political instability. However, emerging industries such as climate technology, biotechnology and artificial intelligence (AI) could potentially offer solutions to some of the problems. These startup companies can find it difficult to find the investments and insurance coverage they need and could represent a great opportunity for brokers.
Joseph Ziolkowski (pictured above) is CEO of Bermuda-based Relm Insurance. His company employs 50 people in locations such as Miami, London and Dubai and specializes in insuring emerging industries.
One of his focuses is alternative therapeutics, particularly psychedelic medications.
Psychedelic drugs: an insurance perspective
Insurance Business asked Ziolkowski why he was interested in psychedelic drugs from an insurance and risk perspective?
“It was really about recognizing the really important advances in an emerging field that would potentially fundamentally change the way people approach certain things,” he said.
Ziolkowski said the medical field of alternative therapeutics signals a growing awareness that neurological disorders, including post-traumatic stress disorder, eating disorders and substance abuse, do not respond very well to traditional clinical treatments.
“The possibility of using psychedelics to actually make significant improvements in the treatment of these disorders and diseases is real,” he said.
Ziolkowski said significant funding is flowing into this sector.
“You have experienced institutional investors investing in early-stage companies that use psilocybin, MDMA, ketamine, DMT and ayahuasca – and these are also called controlled substances or illicit drugs – to make really important and incremental advances in the treatment of . “really debilitating diseases,” he said.
Regulatory framework for psychedelics around the world
Globally, the regulatory framework for the medical use of these drugs is also progressing rapidly, he said.
“You have Alberta in Canada, which was the first province to legalize or decriminalize certain aspects of psychedelic compounds,” Ziolkowski said. “There are two states in the U.S. that have made progress toward legalization or decriminalization.”
He said there are also 25 referendums in U.S. states deciding how drugs like psilocybin and MDMA could be used to treat certain types of illnesses.
“You have Australia, which was really the first country to make significant progress in reclassifying MDMA and psilocybin from Schedule 9 [prohibited] to appendix 8 [controlled drug]which allows psychiatrists to use these drugs clinically to make these types of psychedelic compounds work,” Ziolkowski said.
Relm’s CEO said that governments around the world are considering many other similar legislative advances.
“Major benefit”: D&O
“If you look at this dynamic over a relatively short period of time, you look at the funding that is coming from institutional investors,” he said. “Then you look at the little activity so far from traditional pharmaceutical companies that are starting to make investments and acquisitions of companies that are in early clinical trials for certain types of psychedelic compounds – these companies are going to need insurance.”
Ziolkowski said these startups need coverage to add directors to boards, sign contracts and comply with regulations.
“One of the main applications of our capacity is companies in these early clinical trials of using things like MDMA and psilocybin,” he said. “This is really part of their capital raising initiative.”
At this early stage, he said, these companies are trying to recruit medical experts and other industry players to their clinical trials and panels.
“If you are a credible professional asked to sit on the board of a company, let alone a company that conducts supposedly high-risk activities and investigations, you probably won’t be excited about disclosing all of your personal liability without doing so “Do directors and officers liability insurance, right?” Ziolkowski said.
He said a “key benefit” an insurance company like his could offer was to ensure “substantial coverage for directors’ liability.”
“This allows them to hire experts and professionals who will not only help bring credibility and capability to their company, but also address investor concerns,” Ziolkowski said. “This allows them to raise more capital and expand their investigations into these clinical trials.”
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2024-06-06 18:24:18
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