Insight into attitudes to risk and insurance among Canadian digital health and wellness leaders
Digital technology has worked its way into almost every aspect of our lives. This progress has, of course, been accelerated by the impact of the pandemic and no more so than in the digital healthcare market.
While remote doctor visits and health tracking apps have been steadily growing in popularity for some time now, the sector has been given a huge boost during the pandemic with the sector expected to grow from approximately $100bn in 2019 to as much as $640bn in 2025, according to one estimate.
And it seems that Canadian firms will be playing a key role in driving this growth with over US$300m raised to fund growth in 2020 alone, double the amount raised in 2019.
The appetite to develop this exciting new sector is there and it is clear that digital healthcare is here to stay and poised to become the norm for many of us in the not-too-distant future.
To get more clarity on the sector and its growth aspirations, we recently commissioned a survey of hundreds of digital health and wellness leaders across the globe. And while their appetite for growth is clear, their understanding of the potential limitations of that growth is less straightforward. Understanding the views and attitudes within this dynamic sector reveals a unique opportunity for insurers and brokers alike.
Beazley’s research found:
- 94% of leaders surveyed in Canada expect their businesses to grow in 2021, a confidence that outstrips global sentiment (90%)
- The development of new products and services is seen by 33% of Canadian and global firms as the best way to secure that growth
- In contrast, 57% are seeking investment to grow. While this is broadly in line with the global sentiment (62%), it sits in stark contrast to US firms where 89% are actively seeking funding
The ambition and the confidence are there but if these organizations are to succeed in securing investment or developing new products, they will need business insurance to protect against the unique set of risks they face.
- Medical malpractice/Professional liability
- Products liability
- Cyber and data protection
- Regulatory risks
- Technology errors and omissions
- Media liability
- Bodily injury
A Government consumer survey found that 79% of Canadians would increase their use of digital healthcare if there were more options or choices in service, so the opportunities exist. But those opportunities can only be secured with the right level of insurance in place.
“The development of new products and services to attract more users to the benefits of digital healthcare is a sound strategy but it requires sound risk management to ensure those growth ambitions are satisfied.” Derek Dow, Underwriter – Miscellaneous Medical & Life Sciences Underwriter
Meeting these challenges in a new market is why Beazley’s Virtual Care insurance policy exists. It enables businesses and their brokers to select the coverages they need and to avoid unnecessary exposure gaps.
It is these gaps in cover that pose the highest risk to a burgeoning sector. Our research shows that there is a significant disconnect between how well these businesses believe they are protected and the reality of their security.
- Confidence in coverage is high in Canada with 80% of respondents believing that they had adequate cover in place, compared to 85% globally
- However, that confidence is undermined by the fact that 77% of Canadian respondents admit to only having two types of coverage in place
The reality of their position is significantly more precarious than they believe as the following responses show.
76% of businesses have no coverage for loss of personal medical data, which becomes a particular risk when health services are provided remotely
67% of Canadian businesses have no coverage for system failure or a hack resulting in bodily injury and more than two thirds (69%) have no coverage for medical malpractice arising from remote care provision
This lack of essential insurance cover can be partly explained by the relative immaturity of the market. It is still developing, and many digital health providers are unaware, both on the medical professional and the tech developer side, of how risk exposures cross and converge in the digital health space, creating a new and unique risk landscape.
But this disconnect can also be attributed to a relatively low awareness of insurance and, perhaps, confidence in the industry.
Our research indicates 31% of business leaders in Canada don’t know what types of risks they need coverage for and 39% struggle to read and understand insurance policies. This is broadly in line with the global picture, 33% and 30% respectively
A quarter of Canadian firms (26%) want to establish more robust risk management and insurance frameworks but 36% report they find it difficult to source cover for their specialist business
While it is concerning that the growth prospects of a sector that can bring so much value to society and the economy may not be getting the insurance and risk management support it requires, the good news is that the cover to protect these businesses and support growth exists.
Beazley’s Virtual Care coverage has been designed specifically to support the emergence and growth of this sector. It has been designed based on years of expertise, insight gained by underwriting healthcare, tech and cyber risks, and designed to provide a flexible, holistic solution for this rapidly growing sector.
But as the data shows, there appears to be a lack of understanding of the coverage required, and possibly due to previously patched together policies that left gaps in cover, confidence in insurance is lacking.
The combination of a rapidly growing sector, that lacks understanding of the risk environment and coverage options opens up a huge opportunity for brokers in this space. Guiding clients through the choppy waters of risk management is why the insurance sector exists and, our research shows, these businesses are crying out for that support.
Disclaimer- The opinions expressed in this publication are those of the authors. They do not purport to reflect the opinions or views of Beazley or its affiliates.
About the author:
Derek joined Beazley in 2019 as part of the Global Miscellaneous Medical and Life Sciences team. Based in Vancouver, BC, Canada, he is responsible for underwriting middle market and large risk accounts with a a global focus.
About the author:
Florentina joined Beazley in 2014 and is responsible for underwriting and developing Life Sciences in Canada. She is responsible for underwriting middle market and large Miscellaneous Medical, Life Sciences and Virtual Care risks.