How Can Manufacturers Hedge Risk Through Insurance Under the MDR?

The EU MDR (EU 2017/745) is not only a technical regulation but also a “liability regulation”. For medical device manufacturers, obtaining CE marking does not mean compliance is complete; the real challenge comes after CE – ongoing quality, risk and regulatory responsibility once the product is on the market.

Many companies do not fully realise before entering the EU and North American markets that, in the event of accidents, recalls or adverse events, it is the manufacturer itself that ultimately bears the legal and financial consequences.

This article analyses, from the MDR perspective, which risks manufacturers bear and how they can be effectively mitigated through commercial insurance.

1. Manufacturers’ obligations under the MDR: the “party responsible for the entire product life cycle”

MDR Article 10 clearly states that the manufacturer bears ultimate responsibility for the product throughout its life cycle, from design, production and placing on the market to disposal. The manufacturer’s core responsibilities include:

1. Technical documentation

The product must have complete technical documentation (Annex II), covering:

• Design and manufacturing information

• Risk management file (ISO 14971)

• Clinical evaluation (Annex XIV)

• PMS / PMCF plans

• IFU (instructions for use) and labelling

Incomplete technical documentation is the most common reason for suspension of sales or refusal of certification.

2. Post-market surveillance (PMS) and post-market clinical follow-up (PMCF)

Manufacturers must proactively collect and analyse post-market risk information rather than “only acting when something goes wrong”. This includes:

• Monitoring adverse events

• Analysing risk trends

• Gathering additional clinical data where necessary

• Taking corrective action (such as FSCA, field safety corrective action)

An inadequate PMS system is itself a compliance deficiency.

3. Vigilance and recall (FSCA)

When a product on the EU market causes:

• Serious injury

• Malfunction

• Potential safety hazards

The manufacturer must:

• Report to the competent authority within the prescribed time

• Notify users, hospitals and distributors

• Carry out recalls, repairs, replacements or other measures

And bear all the costs and consequences.

4. Financial responsibility (emphasised in Recital 35)

Recital 35 of the MDR specifically states that manufacturers must have sufficient financial capacity to cover their liability for damage caused by their products.

In other words, companies must be able to pay the various compensation claims arising from their products – a basic expectation of EU regulators.

2. The “five core risks” for manufacturers under the MDR

1. Administrative risk from regulatory non-compliance

• Insufficient technical documentation → required to supplement, sales suspended

• Insufficient clinical evidence → product re-assessed

• Missing PMS → regulatory intervention

These have been the most common “reasons for sanctions” by EU regulators over the past two years.

2. Civil liability risk (key)

Under the EU Product Liability Directive (85/374/EEC), manufacturers bear strict liability (no-fault liability). The user only needs to prove that:

• The product was defective

• Damage occurred

• There is a causal link between the two

And the manufacturer must pay compensation.

Compensation may include:

• Medical expenses

• Follow-up treatment costs

• Loss of earnings caused by the product

• Compensation for emotional distress

• Litigation and lawyers’ fees

In some countries, compensation can reach millions of euros.

3. Recall cost risk

Recalls (FSCA) are a responsibility the manufacturer must bear, including:

• Notification and announcement costs

• Product retrieval and transport costs

• Replacement or repair costs

• Losses incurred by healthcare institutions from taking products out of use

• Personnel and technical costs of corrective actions

A single recall can wipe out a year’s – or even several years’ – profit.

4. Brand and market risk

Accidents and recalls can lead to:

• Distributors ending cooperation

• Loss of market trust

• Difficulty re-launching the product

• Damage to the company’s brand (hard to recover)

Such losses cannot be avoided with test reports or technical documentation.

5. Business operation risk

When large-scale recalls or compensation claims arise, many small and medium-sized device companies face:

• Cash-flow pressure

• Protracted litigation

• Project suspension or failed certification

• Risk of bankruptcy due to large compensation payments

This is why the EU requires manufacturers to have “sufficient financial coverage”.

3. How can manufacturers mitigate risks under the MDR?

EVERBIZ recommends that companies strengthen their safety margin in three ways.

1. Strengthen systems: prevent risks from occurring

Build a complete internal compliance system:

• Structured management of technical documentation

• Closed-loop risk management (ISO 14971)

• Set up a PMS + PMCF team

• Consistency management of external documents

• Regular review of the quality and regulatory chain

This is the most fundamental way to reduce regulatory sanctions.

2. Plan an “incident response mechanism” in advance

Including:

• Adverse event reporting process

• Recall initiation mechanism

• Legal response plan

• User notification procedure

• Supply chain coordination mechanism

When an incident occurs, a fast response = lower compensation.

3. Transfer risk through medical device product liability insurance (key)

The MDR explicitly requires manufacturers to have “sufficient financial capacity”, and in practice the most direct and lowest-cost way to achieve this is to:

Purchase Medical Device Product Liability Insurance, which can cover:

• Compensation for injury or death caused by the product

• Medical and treatment costs

• Losses of hospitals and users

• Legal costs

• Market recall costs (can be included)

Industry-recommended coverage ranges by product category:

For companies exporting to Europe and the US, insurance has become an essential compliance element, not an option.

4. EVERBIZ offers medical device insurance solutions for global markets

In addition to routine compliance services such as MDR technical documentation, clinical evaluation, PMS and PMCF, EVERBIZ can help companies arrange:

Medical device product liability insurance solutions for European and US markets

• Covering the EU, UK, US, Canada and other markets

• Help in choosing the right level of cover

• Help in arranging “recall insurance” and “legal expenses insurance”

• Reducing financial pressure on companies in the event of incidents or recalls

• Increasing the trust of EU economic operators (importers, distributors) in the product

Enabling companies to expand into global markets safely, steadily and with low risk, even under heavy regulatory pressure.

Through:

• Robust technical and quality systems

• Established PMS / FSCA mechanisms

• Appropriate product liability insurance

Manufacturers can calmly meet the various challenges of the MDR.

More articles:

Understanding the FDA’s Stricter EMC Requirements for Common Sources of Electromagnetic Emissions

How to Avoid Conflict Minerals Risk: A Complete Guide to the CMRT | EVERBIZ Compliance Class

Why Is Amazon Full of “Home Nebulizers”? The Truth Hidden Between FDA Regulations and Amazon Policy

The CE-MID Directive Explained: Don’t Mistake Laboratory Instruments for Legal Metrology Equipment

[EVERBIZ EU Regulations Column] Which Products Fall Under the EU GPSD? Why Do Some Consumer Products Need CE Marking and Others Don’t?

Key Changes in China’s New Medical Device GMP: Effective 2026 – A Must-See Comparison Table