Moneyball for Life Science D&O


By: Mike Milligan – Managing Director, Life Science

When Mookie Betts and Jose Altuve won the American League MVP award in 2017 and 2018 respectively, it marked the first time players under six feet tall had won MVP awards back-to-back since at least 1990. In that time period, the award was won by players at least 5’10” tall 91.6% percent of the time. Human scouts liked taller players. Taller players weren’t always better, but they were drafted more frequently. There was no effective way to measure if shorter players could be better.

Analytics have shed new light on the abilities and potential of Major League Baseball players of all shapes and sizes. Team executives can measure launch angle and exit velocity from hitters. Ballparks at both the minor league and college levels are now equipped with some of the technology that helps Major League general managers assess who might be successful at the professional level. Analytics create new opportunities for players who may have been overlooked by the eyes of human scouts.

Just like how analytics changed the game of baseball, the same is happening for Life Science D&O. Over the past 25 years, most insurance companies have used the same generic analytical data and peer purchasing data as their competitors. Pricing wasn’t extreme; if a client purchased $5M more than necessary, it usually only cost $25-$50K in additional premium. Rates have skyrocketed over the past four years, though the hard market seems to be behind us, it’s still important to base your decisions on actual litigation outcomes.

The overwhelming sentiment among CEOs and CFOs of Life Science companies is, “this is the best time in history to be a publicly traded life science company.” Our research shows that the cash balance for life science companies with $3B to $10B market caps has grown by $22B since Q1/20.

Meanwhile, brokerage firms have repeated the mantra, “there has never been more litigation in history.”

There was a large disconnect so C3 went to work to find out why.

We studied every life science lawsuit dating back to 1986 and compiled the data from the hundreds of suits into a database, along with different facts about the companies involved in those suits. Our proprietary system captures more than 66 variables involved with litigation, including market cap, market cap drop, why the company was sued, where in the lifecycle of drug/device the lawsuit occurred and much more. These real-time analytics give you the power you need to make an educated purchasing decision.

Imagine if your company is sued:

Because you received a Complete Response Letter?

Because you missed Guidance?

Because you just failed Phase 3?

And your Insider Hold is under 50%? Does that impact the outcome?

But you have $1B+ in cash?  Does that impact the outcome?

What if you failed Phase 3, had a short percentage of 20%, had $250M in cash, we’re trading less than cash? 

Which of those factors is most important for the litigation outcome?

Standard practice across the industry is to measure stock drop information and allow it to dictate what limit you should purchase. Every competitor uses aggregated data from public sources that shows hypothetical stock drop scenarios that indicate settlement values if the stock fell 10-60%. They look at peer purchasing data, but they neglect to analyze how many of those lawsuits are dismissed vs. settled. Further, they don’t tell you why certain cases settled. The aggregated data excludes some of the most important and telling information. The aggregated data is vastly generalized from industry-specific data. Each industry has its own trends that need to be understood by the broker to help negotiate better terms with the carriers and aggregated data doesn’t allow for that.

Our research, however, is comprehensive and industry specific. It tells us there are several other factors that impact the outcomes of litigation.

It’s time to throw away the hypotheticals and aggregated data. It’s time to get specific.

If an organization had $500M in property insurance, they would not insure it for $1B. Yet, we continue to see companies with $10M of D&O exposure insured for $50M or more. This mistake is rampant in companies across the industry. We have data on every lawsuit that no other broker has. Most of the time, though, we use the data to negotiate better terms with the excess carriers when boards are set on a certain limit of insurance. As further example, we successfully negotiated a 15% renewal when the client was told by a national broker that it would be 40-60%.

Ask your broker these simple questions:

How many of the above cases have those allegations?

How many were dismissed?  How many settled?

What is the average settlement amount?

We have The Answer, a real-time, live database that can answer all of these questions for you!

 Our Results:


We can answer the complex and nuanced questions about your business and how much you should spend on D&O Insurance using dismissal and settlement rates and average and medium settlements by industry. Our competition cannot match our data and insights by industry because aggregated data leads to bad advice and overspending. We are shaking up the industry status quo and we invite you to discover the difference.

Mike Milligan started his insurance career in 2000 and was a Principal at Barney & Barney where he grew his practice to 600 life science clients leading 45 IPO D&O placements, working with over 150 public companies. Barney & Barney was acquired in 2014, the entrepreneurial spirit drove him away from the large publicly traded firm to C3 – one of the fastest growing privately held brokerages in the US. He can be reached at or at (858) 531-1964.