Implications for insurers
The accelerating adoption of digital health technologies, including medical apps, wearables, and AI-enabled devices can improve patient outcomes, but creates new risks for health care professionals and device manufacturers, with associated considerations for their insurers.
Key trends in 2024 include the digitalization of health care, AI-enhanced devices, and the rise of telehealth, with virtual hospitals potentially accommodating over 17% of total admissions remotely, reducing costs and improving patient experiences, especially for chronic conditions. Innovations like wearable glucose monitors, blood pressure monitors, and virtual reality applications for mental health and surgical assistance exemplify this technological surge. AI's role in health care is pivotal, offering expedited diagnostics, predictive analytics, and enhanced decision-making for professionals.
However, these advancements introduce new risks. Insurers must consider potential issues such as defective designs, software malfunctions, and the accuracy of patient data inputs. Cybersecurity threats, like the manipulation of devices by hackers, pose significant dangers. Global regulatory bodies are updating legislation to address these risks, emphasizing post-market surveillance and cybersecurity. The UK's Medical and Healthcare Products Regulatory Agency is enhancing regulations for medical devices and developing detailed guidance on how the regulations apply specifically to AI and software medical devices. The EU's upcoming AI Act and AI Liability Directive aim to balance technological innovation with user protection, broadening the scope of liability for AI-based products. And in the U.S., we expect continued attention from Congress on the potential applications of AI in health care, as well as additional agency activities to implement the Biden Administration’s Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence.
Liability for smart medical devices is complex, involving multiple potential defendants and intricate causation issues. Manufacturers are likely to bear the brunt of liability, facing reputational damage and costly legal actions. To mitigate risks, stakeholders must ensure robust software design, clear labelling, comprehensive post-market surveillance, and effective cyber security measures. Collaboration among manufacturers, health care providers, and regulators is crucial to ensure safety, efficacy, and legal compliance, ultimately improving patient care and health care efficiency while navigating the associated risks and liabilities.
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