Malpractice Insurance Needs “Refreshing”

Since the beginning of the COVID pandemic, the use of technology in healthcare has exploded, from telemedicine to AI-powered diagnostic tools.

This has altered risk profiles and increased the vulnerability of some organizations to the unexpected. Tim Boyce, CFC’s head of professions and healthcare, has called for an insurance “refresh” and warned that traditional coverage may not be enough.

CFC’s digital healthcare business examined its own claims from 2018 to 2021 and discovered that 70% of them came from places that a traditional medical malpractice policy would not cover.

“My biggest concern is that a lot of companies in this space, and even traditional healthcare companies that are switching to a hybrid model because some patients want to do some services electronically, are probably completely unaware of the potential risks and exposures they’re walking into while they’re sleeping,” Boyce said.

“[Or] they may be unaware that the traditional medical malpractice policy they’ve had for many, many years isn’t as good as it once was because it doesn’t account for or figure out all of these different risks they may be taking.”

Boyce stated that it was time to “rethink and refresh” the risks that will affect healthcare businesses in 2022 and beyond, as well as the types of insurance that should be available.

“Historically, when we know where the claims are going to come from, we roughly know what the risks and exposures are,” Boyce said. “However, when you combine various types of technology to potentially diagnose patient conditions using AI, or if they’re offering a video consultation and haven’t picked up on something, or they give the wrong diagnosis because they’ve been using technology to diagnose cancerous lesions, it can be really problematic.”

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According to an insurance company’s report, the “digital health and wellness sector lacks coverage.”

Telemedicine, also known as virtual appointments, is now widely used in healthcare around the world. The COVID-19 pandemic and consumer choice have increased its use. The pandemic, according to Boyce, “likely accelerated the adoption of telehealth solutions by about ten years.”

Telehealth has remained the most important component of CFC’s digital healthcare operations. It accounted for 53% of its portfolio in 2021.

Video consultations are now available to 99% of general practitioners in the United Kingdom. Less than 10% of GPs did so prior to the country’s first COVID lockdown in February 2020.

According to PWC, at least $17.8 billion has been raised by Canadian healthcare start-ups. Spending on digital healthcare is expected to more than double by 2030, with telehealth and virtual care services receiving a lot of attention.

“The pandemic fueled growth, but it wasn’t the only reason,” Boyce explained. “We’re not delusory; it’s clear that the pandemic has aided.” It cast a whole new light on telehealth.”

According to a McKinsey study published in July 2021, the number of people using telehealth is 38 times higher than it was before the pandemic.

People’s perceptions of the tool have shifted as it has become more widely used, and medical providers are likely to consider a hybrid model in the coming years.

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“A lot of people were very opposed to it because they thought telehealth had a lot of issues,” Boyce explained. “Because you couldn’t physically touch and feel the patient, you probably couldn’t diagnose them.”

“However, the pandemic has proven that these types of thoughts and comments people had previously have been mostly disproven.” There hasn’t been a significant increase in incorrect diagnoses as a result of telehealth.”

Other new technologies being used by healthcare organizations include mobile health, solutions for remote patient monitoring, and online fitness.

CFC claims that AI has grown by 32%, despite the fact that it will only account for 4% of the MGA’s portfolio by 2021.

The technology is used in chatbots, which can determine whether or not someone requires an in-person appointment. It is also increasingly being used in diagnostics, for example, to examine CT scans. According to Boyce, the technology can examine up to 20,000 images in a matter of minutes.

“The more difficult AI tools are the ones that are more like black boxes and make diagnostic decisions directly for patients, rather than being used as a secondary tool,” Boyce explained. “These are the areas that most concern us.”

“AI takes many forms, and you don’t always know why an algorithm made a particular choice.”

Organizations must also deal with regulations when it comes to AI and telehealth. This is because governments and regulators are still determining what constitutes good practice and whether or not to maintain the deregulation that came with COVID.

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Intellectual property (IP) claims have also been a source of concern for digital healthcare companies. IP issues have accounted for approximately 18% of CFC’s claims in the segment.

“There is a lack of legal clarity around whether some forms of AI would be considered intellectual property, so if a potential developer leaves and goes to another organization, and they create an algorithm that is very similar to it, have they breached their potential IP?” Boyce stated.

“A lot of it is frightening because there isn’t much positive coverage in any health insurance policy.” A medical malpractice policy, for example, would not cover it.”

CFC creates a health insurance unit for the London market.

CFC launched its digital healthcare practice in the United States five years ago and has since expanded into other markets.

In 2021, the US accounted for 81% of its book, down from 92% in 2019.

The number of Canadian insureds has increased from 2% in 2019 to 5% by 2021. At the same time, the number of insured people in the UK increased from 5% to 10%.

“Adoption rates in Canada are a little bit slower because it took a little while to get the government on board,” Boyce explained. “Their approaches to paying for health care are very similar. In the United Kingdom, we have both the National Health Service (NHS) and a private system.

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