4 November 2025
In the life sciences sector, milestone payments are more than just revenue-they are lifelines.
These payments, often tied to the successful completion of key development stages such as preclinical studies, clinical trials, regulatory filings, or approvals, are essential for maintaining operations, securing investor confidence, and advancing innovation. Yet, they are also highly vulnerable to disruption.
That’s why protecting them with correctly structured business interruption insurance is critical.
The high stakes of milestone payments
Unlike traditional revenue models, life science companies-particularly those in drug development or medical device innovation-rely heavily on milestone payments from licensing partners, collaborators, or investors. Missing a milestone doesn’t just delay income; it can jeopardize the entire development timeline, trigger funding shortfalls, or even threaten a company’s viability.
These payments are often contingent on meeting strict deadlines. A fire in a lab, flood damage to critical equipment, or contamination in a production facility can delay progress just long enough to miss a payment window. Without proper coverage, the financial impact can be devastating.
Standard insurance falls short
Traditional business interruption insurance is typically designed for companies with ongoing sales and earnings. It covers loss of income following physical damage to insured property, but it often doesn’t account for the unique nature of milestone payments, which are sporadic, conditional, and tied to intangible progress.
If insurance isn't tailored to recognize these payment structures, companies may find their claims denied or underpaid-despite suffering genuine financial losses from a covered event.
Tailored coverage for milestone risk
To mitigate this risk, life science companies should work with insurers and brokers experienced in the sector to build bespoke business interruption policies. These policies can be structured to cover lost or delayed milestone payments resulting from insured physical damage events, with clearly defined triggers that align with the company's development timeline and financial agreements.
Milestone payments are mission-critical in the life sciences. They are fuelling research, driving growth, and sustaining investor trust.
Protecting them with the right form of business interruption insurance is not just a financial safeguard; it’s a strategic imperative. Tailored coverage ensures that innovation isn’t derailed by unforeseen events, helping companies stay on course in their journey from lab bench to market.
This is for general information only and does not constitute advice or a personal recommendation. Cover is subject to insurers policy terms, conditions, and exclusions.
