Insurers Strive to Keep Pace with New Medical Devices' Emerging Liability
As medical devices including monitors for glucose, heart rate and other vital functions move to personal smart phones and watches, do insurers face potential liability if the technology fails?
When Dr Leonard McCoy strides into the Starship Enterprise’s medical bay and waves a small handheld device over the body of a patient he gets an instant reading of their vital signs, often with an equally instant diagnosis.
This may still be science fiction but the world of virtual medicine, powered by smart medical devices, is edging us ever closer that 23rd century vision. We are on the cusp of an era of hospitals without walls, where virtual medicine will be enabled by the increasing sophistication and connectivity of smart medical devices. Insurers will need equally sophisticated and joined up responses to meet the challenges of this brave new world.
If there is one issue with one product, one software failure, one failure to respond to the data, the potential liabilities could be huge.
From the fitness monitors that have replaced the wrist watch, through the falls detection devices for the elderly and frail, to the latest heart pacemakers, connected medical devices are everywhere.
“The use of smart technology in healthcare has been advancing steadily over the past several years, putting powerful devices like smart insulin pens, connected inhalers, asthma monitors and more in the hands of everyday consumers and allowing them to better manage and address their own health needs — as well as to quickly access help if something goes wrong. Wearable devices like biosensors and smart watches can also allow healthcare professionals to remotely monitor ongoing conditions and gather data, allowing observation and treatment that was previously only possible in an institutional setting to take place anywhere”, explained a recent report from Econsultancy.
The focus so far has largely been on wearable and external devices but the world of medicine is already moving towards implantable devices that can be connected to remote monitoring systems. Every advance presents insurers with fresh challenges.
At one level these are just another generation of connected devices, extending the Internet of Things into the world of medicine, says Tom Hughes, senior market services executive at the International Underwriting Association: “There are opportunities to use what we have learnt from other technologies and internet connected devices. Insurers will look to apply that knowledge to smart medical devices”.
However, the delicate interface between technology and people’s health and wellbeing will bring with it a myriad of new risks and potential liabilities, warns Karishma Paroha, legal director at law firm Kennedys:
“If there is one issue with one product, one software failure, one failure to respond to the data, the potential liabilities could be huge.
“The exposures will be stretched in so many different directions. You will need bespoke products that bring in cyber, product liability and medical malpractice on one cover”.
As exciting as these new technologies are, insurers will need to be very aware of the potential for failure in complex, connected supply chains.
This starts with the user, says Hughes: “You are giving an individual the power to monitor their health in a way that hasn’t been possible in the past. What sort of responsibility does that place on them? We may see case law evolving around users’ responsibility for keeping the devices and the software up-to-date”.
Insurers will need to put in place the right mandates for data to be recorded because they will need a solid record of the data collected by the devices and the decisions made in response to that data, whether those decisions are made by the device, the computers that support it, or by a person.
As we move towards that new world of virtual hospitals, with totally remote monitoring and delivery of health care, that responsibility will flow through the entire system, says Paroha:
“When you have people connected to virtual GPs, virtual pharmacies and virtual hospitals, everyone in that chain has to be updated simultaneously. There could be huge risks if key groups are not fully updated. It could be hard to apportion blame when the data chain breaks.”
It could also be hard to decide where any disputes about liability should be heard if a British user of a German device is connected to an expert in North America.
Then there is the possibility of a catastrophic event, such as an intense electro-magnetic storm along the lines of the 1859 Carrington event, which could cripple all electronic communication, disabling medical devices. There could also be more localised severe natural catastrophes or man-made disasters that temporarily disconnect people from vital medical support.
“Who is liable if there is a catastrophic event and all these products fail and the complex chain breaks?”, asks Paroha, posing a question that cuts across every aspect of modern society’s dependence on technology.
Insurers will also have to brace themselves to handle vast amounts of new data, and make sensitive decisions about how much individual risk data to collect. Much of this could be highly sensitive medical information that will require robust data protection protocols and top class cyber security.
“The data challenge is very significant”, says Hughes.
“Insurers will need to put in place the right mandates for data to be recorded because they will need a solid record of the data collected by the devices and the decisions made in response to that data, whether those decisions are made by the device, the computers that support it, or by a person.
“We are talking about huge quantums of data and insurers need to be able to process and manage that data and understand what it means”.
Data management right through the chain will be crucial and underwriters will need to reassure themselves that the developers of the devices and the support services behind them are able to respond to the huge data flows, says Paroha.
“How do we cope with all this data? Do we have the care infrastructure to cope with the volume of data coming at us? Can the systems respond adequately to all the alerts they will generate?”
The potential benefits of connected medical devices are enormous, and are already helping people with complex medical conditions find affordable life assurance cover, often essential for obtaining mortgages or securing large loans, says Torquil McLusky, managing director of Pulse Insurance.
“They give an indication that someone is on top of their health and taking all the right actions and have got control over their conditions.
“People with single conditions will be able to demonstrate to insurers that they can be treated as a standard risk. But it is going to be a while before we can start using smart medical devices to discount our rates for people with complex conditions”.
He was particularly excited by the potential preventative benefits of connected smart medical devices: “The remote monitoring is real progress, as the chances of some acute medical incident taking place will be much reduced”.
It is going to be a while before we can start using smart medical devices to discount our rates for people with complex conditions.
Prevention is already a focus for employers where remote monitoring of workers has been shown to prevent accidents and improve response to medical emergencies. One large US workers compensation insurer has been trialling connected devices for people working on the vast prairies in the Mid-West, monitoring their vital signs and sending them warnings when abnormal heart rate, body temperature or movement readings come through. Agricultural workers are often hundreds of miles from supervision or medical support and keeping them connected has the potential to save lives and reduce insurance costs for employers.
As we move into the second quarter of the 21st century, that 23rd century vision moves ever closer.
“It is going to become just part of who we are as the technology develops”, says Paroha. “Everything is becoming smaller. Soon, tiny nano devices will be implanted in our bodies.”
Perhaps it is those nano devices that Dr McCoy is reading.
How soon this science fiction becomes reality nobody knows, but it is likely to be long before the 23rd century dawns.