How does sponsor indemnity work in CRO MSAs?

Sponsor indemnity in CRO MSAs typically requires the CRO to indemnify the sponsor for service-related errors at a multiple of the service fee (often 1x, sometimes 2x or 3x). The indemnity scope can be quite broad if not carefully negotiated - some sponsor MSA template language extends to indirect, consequential, and special damages.

Three operator-side negotiation levers: cap the indemnity at insurance limits (most operators with leverage achieve this), exclude consequential and special damages from the indemnity scope, and exclude the sponsor's own gross negligence or willful misconduct from the indemnity obligation (mutual indemnity for fault-based scenarios).

The professional liability E&O tower needs to be sized to the maximum aggregate sponsor indemnity exposure across the active CTA portfolio, with per-project endorsements where one sponsor demands materially higher indemnity than others.

Sponsors typically also require the CRO to maintain specific insurance schedule demands continuously - products liability, cyber, EPL, fiduciary, and the E&O cap. The CRO's risk-management discipline includes tracking each schedule against current coverage.