Online advertising complaints, inadequate care and cyber threats top the list of sector-specific risks facing digital health industry leaders
The booming digital health and wellness sector is optimistic about its future, yet it faces a wide range of complex, interconnected risks that must be resolved if it is to achieve its growth potential.
These are among the findings published today in a new report, Spotlight on digital health and wellness [LINK], highlighting attitudes to risk and insurance among digital health and wellness leaders across Asia, Europe and North America.
The report is based on a survey commissioned by specialist insurer Beazley of more than 350 executives from established telehealth and telemedicine companies to newer sub-sectors including mobile-health, health software platforms and life science technology. It reveals leaders’ views on the drivers of and barriers to growth; the risks that impact their businesses; and their insurance-buying habits and coverage gaps.
The new report found that although 89% perceive the sector to be relatively high risk, 70% have insurance coverage in place for just one or two key risks, leaving them unnecessarily exposed to financial or reputational damage.
Despite the reliance on technology, more than two thirds lack insurance coverage for bodily injury claims arising from system failure or cyber breach.
Trends in leaders’ fears vary by country and sub-sector. However, it is telling that in an industry that relies on digital services and distribution, the sector risk of greatest concern globally is that online advertising misrepresents their offering or competence of their practitioners to potential customers (34%).
Other risks particular to this sector that top the list of concerns include:
- cyber attack or system failure (27%)
- inadequate care provision due to human error or poor treatment or advice (27%)
- failure to intervene, diagnose or treat due to technology or data shortcomings (23%).
When it comes to more general business risks, supply chain and manufacturing instability are of greatest concern to the digital health sector (24%), closely followed by:
- ability to recruit retain and check credentials of practitioners (23%)
- economic uncertainty (23%)
- meeting regulatory requirements (22%).
A key theme to emerge from Beazley’s research is that despite being optimistic for the future and an influx of capital into the sector, high levels of confidence in understanding what insurance cover is needed may be misplaced.
Jennifer Schoenthal, Global Virtual Care Product Lead at Beazley, said: “Many digital health and wellness companies are unnecessarily exposed to financial or reputational risk through underinsurance. Of concern is the lack of specialist coverage in place to protect against the particular risks this sector faces, notably the risk to physical health that can be caused by lost or false data, system failure or cyber breach.”
Further highlights from Spotlight on digital health and wellness include:
- 89% perceive the sector to be relatively high risk but optimism remains high with nine in 10 businesses expecting to grow this year
- 62% are raising capital while 58% are experiencing growth directly due to COVID-19
- While 85% are confident they know what insurance coverage they need, 70% are only covered for one or two key risks
- Worryingly, 36% said they have struggled to find insurance that is right for their business
- More support from the insurance industry would be welcome – a third want more education on the risks they need covered.
Jennifer Schoenthal added: “Digital health and wellness businesses need robust risk management and insurance that enables them to manage the interconnected risks they face and meet their growth ambitions. Industry leaders have said they want the insurance industry to improve how we communicate, share knowledge and collaborate, to deliver more appropriate coverage, more effectively. There is a huge opportunity for the insurance industry to heed these messages and work more closely with telehealth and digital health businesses to develop the holistic insurance solutions they need to avoid risky gaps in their coverage and to help them flourish.”
Evan Smith, Global Head of Miscellaneous Medical and Life Sciences at Beazley, said “Since we wrote our first telehealth risk in 2009, the digital health sector has continued to evolve in line with technological advancements and changing attitudes towards remote care among patients as well as health practitioners, governments and investors. However, the sector has grown exponentially from the beginning of the pandemic, fuelled by an impressive track record in innovation, a wave of fresh capital, expansion plans and demand.
“There is a considerable opportunity for this sector and for the insurance industry to strive to deliver better risk mitigation and risk transfer. This way we can help digital health and wellness firms continue to strengthen their businesses and raise capital, and to develop solutions that will play a key role in supporting public health and enabling future economic growth.”