Sam McCall, co-founder of SeaTox Research Inc., said rising insurance rates on his biotechnology equipment are making it difficult to stay in coastal North Carolina.
After he and his wife’s Wilmington-based biotech company turned 10 last year, McCall said the biggest cost that concerns him is insurance. And rates keep increasing.
Earlier this month, the N.C. Rate Bureau requested the state raise homeowners insurance rates by about 99% in the coastal area. While property owners and local officials in recent weeks have voiced opposition to the homeowners rate hike, the cost of insurance for business owners is another major concern.
McCall said he has over $1 million worth of equipment in his lab.
“So those barriers of maintenance of your company just keep going up every year,” he said. “It just becomes harder and harder to maintain those abilities to do business.”
In general, insurance rates on commercial property could go up 50% across the country, according to Randy Reeves, senior account executive on commercial lines at Wells Insurance.
These hikes are partly a result of weather events, such as hurricanes, that have caused more than $1 billion in damages in the past five years, he said. In North Carolina, there have been 36 of these climate events over that period, according to the National Centers for Environmental Information.
For a biotech business, the contents of the office, cleanroom equipment and other highly technical tools can triple the property exposure on property insurance, making it more difficult to get insured. Rates have also increased by double digits every year for the past three years, Reeves said.
“It's a cumulative effect that's crushing [business owners],” Reeves said.
McCall said he's also coping with the rising costs of running a biotech company without the support he once had. He wants an industry peer to help him mitigate the struggles of operating a biotech company in a natural disaster-prone area. But mentorship is hard to come by once the company outgrows the initial startup phase, he said.
“We've worked so hard as a community to try and increase the number of companies that are built,” McCall said. “The problem comes in that once you get an established company, there's really not a whole lot of growth potential.”
McCall has an admittedly small lab, he said. Companies with larger labs would most likely have higher insurance payments, but those companies would also have more resources to mitigate those payments.
Alcami, a contract pharmaceutical manufacturing and development company with offices in Wilmington, has thousands of square feet of lab space across the state.
Ken Morgan, Alcami’s chief financial officer, said insurance rates are not a big concern for the company. He has seen Alcami’s clients be affected by interest rates, determining how much they will spend on Alcami’s services.
Alcami covers all its equipment with insurance, especially because the company operates in a hurricane zone, Morgan said. The insurance cost can be expensive, but the cost gets folded into the company’s overall portfolio. He said rates have increased due to major storms, he said.