SPOTLIGHT ON DIGITAL HEALTH
Which risks could derail digital health and wellness sector growth?
of established businesses rank cyber their top concern.
Our research shows that the perception of risk is running high in the digital health and wellness sector. Fully 89% of respondents feel they are operating in a moderate to high-risk environment. They are concerned about both insurable and uninsurable risks, those that affect the sector as a whole and risks that are particular to their types of business.
Client complaints are the top digital health and wellness industry risk
In an industry based on digital offerings, it is telling that the sector risk that most concerns executives is that online advertising unfairly misrepresents the service they are offering or the competence of their practitioners.
Larger businesses worry more about cyber
Beyond the headline findings, there are some interesting nuances in the business risks that keep different executives awake at night.
- Established businesses trading for over three years are substantially more concerned about the threat of cyber attacks or system failures with 31% rating cyber as their number one risk compared with only 25% of start-up businesses.
- The top concern within life science technology businesses – the most established of the digital health sub-sectors – is inadequate client care due to human error, cited by 29% of business leaders.
- Well over a third (39%) of telemedicine, telehealth and health technology businesses were most concerned about media liability risk.
- Because the industry is not yet mature, the pattern of insurance claims in the digital health space is still emerging. Read more here about the types of claims Beazley handles
Individual company risks cover a broad range
At the individual company level, business leaders are highly concerned about the stability of their company’s manufacturing operations and the reliability of their supply chain. Even in a digital world, sub-sectors including life science technology, medical technology platforms and mHealth wearable devices still have a fundamental reliance on technology and on physical production chains.
Different regions, different risk focus
It is important to note, however, that there were significant regional variations in the business risk rankings.
- Canada is the territory most concerned by the risk of manufacturing and supply chain instability with 36% of business leaders identifying this as their top concern.
- In the US, businesses were more concerned about economic uncertainty and (in a more litigious society) the ability to recruit and check the credentials of practitioners. These risks were ranked joint highest by 28% of business leaders.
- In the UK, the top concern of businesses by a substantial margin is compliance with regulatory requirements, selected by over a third (34%) of business leaders.
These concerns suggest business leaders are alive to the threat that a shifting regulatory landscape can create significant risks. As we move beyond the current crisis, credentialing and regulatory requirements may drive significant exposures as the industry grows.
Businesses worry about time and cost to remediate risk
Executives worry about the time and expense involved in managing industry and business risks. They are also concerned by regulatory action and fines that in turn run the risk of causing brand or reputational damage.
of life science technology businesses rank inadequate client care due to human error as their top concern.
Significant sub-sector variations
There were significant variations in responses between sub-sectors.
- One consequence of risk cited by a third of respondents was brand or reputational damage followed by the associated risk of regulatory action, fines and disruption to operations (all 29%).
- The mHealth sector seems substantially less concerned about the cost involved with informing customers of a data breach. Just 16% of mHealth leaders rank this as their top concern - lower than in every other sub-sector.
Claims picture is evolving
Fundamentally, we are yet to see the claims outcome of the pandemic on the digital health sector. Many courts remain closed or are operating on a reduced basis and a deep stock of goodwill towards the medical profession in light of its response to COVID-19 may have delayed potential claims.Click here for claims examples