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Disconnect Challenges Insurers

A disconnect remains between what the digital health & wellness industry says and what it does in terms of risk and insurance protection.

On the surface all is well.

  • 88% are confident they understand their insurance needs5
  • And for the first time we see almost half of companies (47%) working directly with insurers as well as with an insurance agent (40%) or online (40%), reflecting the successful strategy of many to provide a range of contact options and services packages to support their insurance offering.

However:

  • Only 40% of digital health & wellness businesses we surveyed have one policy to cover all their risk needs thereby avoiding gaps and omissions and fewer than a third (27%) have specialist insurance cover designed for their business.
  • Bodily injury is a top risk for this sector in terms of reputation and by association financial performance; yet only 32% are covered for malpractice, 30% for technology error or omission and 26% for system failure that could result in bodily injury. Part of the issue is cost as we explore below, but a concerning proportion of executives fail to understand the unique combination of factors that can impact their duty of care obligations, brand equity and social licence to operate.

Two thirds lack essential specialist insurance cover 

  • Competing priorities

    Many digital health & wellness businesses set insurance budgets at the beginning of the year. With costs rising across the board, including for essential covers like workers’ comp, there is less cash available for discretionary covers.

    This often means that when there are competing priorities, businesses won’t purchase insurance unless they are contractually obliged by an investor, a partner or regulator. 

    But lift the hood and there is more to this than cash.

    Duty of care

    Many tech entrants into the healthcare space do not recognise they have a duty of care – seeing service users as paying customers rather than vulnerable patients.

  • “The thinking goes - we run algorithms, we deliver data for diagnosis, or we provide network navigation, so we have no duty of care to the patient. This is wrong – plaintiffs will argue, and courts will likely find a duty of care."
    Evan Smith
    Product Leaders, Global Healthcare, Specialty Risks, Beazley

    The reality is that while a small proportion of boards may be naïve or in denial, most will recognise there could be an exposure, but often won’t buy cover until an incident or claim forces them to act.

 “Companies are working out what cover they need to manage particular risks – there are lots of unique scenarios. They aren’t intentionally creating gaps in cover by only buying what’s required. We would say – if you have a package then inevitably there is less pointing of fingers between different carriers as there are scenarios that may implicate multiple traditional lines of coverage. There is still an education job to be done.”

Keri Marmorek
Claims Team Leader, Healthcare Claims

5 ‘Moderately confident’ and ‘Very confident’ answers combined.

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