Health tracking devices — hidden risks in wearables?
All-singing, all-dancing health tracking devices are becoming more sophisticated and prevalent. The potential for product defects or faulty advice, as well as issues around data security, could increase the potential for rising insurance claims and reputational risk.
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- Faulty data or algorithm-bias can lead to inadequate health advice, resulting in bodily injury and single large-losses in casualty.
- Morbidity or mortality could rise in case of a serial product failure leading to multiple users being given inappropriate medical advice.
- Cyber risks associated with data-collecting health devices (including risks of data breach) could trigger liability covers.
- Liability and data privacy issues present reputational and investment risks for all parties, including insurers.
In recent years, wearable health monitoring devices have become ever-more sophisticated. Among many functions, today devices can be used to monitor sleep patterns, nutrition, exercise and help people stay on top of chronic diseases.1 They can also monitor mental health (via AI face recognition capability), and be used to manage stress and well-being. Technologies such as brain-computer interface (BCI) are pushing boundaries even further. BCI can connect to a human’s brain, to read and process brain activity into data. Trials have indicated that BCIs can detect impending epileptic activity and alert a user to take a dose of medication to halt coming seizures.2 Several companies are developing BCI devices to, for example, reduce stress or as an aid in meditation.3
Such developments are driving initiatives to incorporate digital tools in health care services. For instance, in Germany a law with the aim of kick-starting digital transformation of the care system was recently passed.4 The law has smoothed the way for firms to take digital health applications to market and for use by physicians. Among the first available are apps to manage conditions like tinnitus, obesity and osteoarthritis.5 And in the US, companies like Apple and Google have secured FDA approval for some of their devices.6
The availability of a broader range of health data will enable insurers to design more personalised covers and services for customers.7 A challenge, however, is data security /privacy.8 Today’s sophisticated devices collect very sensitive personal data, with brain activity data possibly the most intimate of all. Additionally, the insights derived from the monitoring devices could lead to over-diagnosis and rising healthcare costs.
Insurers could also face losses arising from litigation against manufacturers in the case of device defect. For instance, algorithm-bias could lead to inappropriate medical advice from devices. If this were to lead to bodily injury or other patient impairment, the resulting casualty claims awards could be substantial. Another complexity is that interconnected products do not fall neatly within conventional product liability regimes,9 meaning it is not always clear where responsibility for device malfunction lies: manufacturer, system designer, software provider or even the end-user?
1 J. Schoonbee, “How lifestyle data can help us personalize the insurance industry”, ITIJ, 1 February 2021, https://www.itij.com/latest/news/how-lifestyle-data-can-helpus-personalise-insurance-industry
2 L. Drew, “The ethics of brain – computer interfaces”, Nature, 24 July 2019, https://www.nature.com/articles/d41586-019-02214-2
3 L. Golembiewski, “Are You Ready for Tech That Connects to Your Brain?”, Harvard Business Review, 28 September 2020, https://hbr.org/2020/09/are-you-ready-fortech-that-connects-to-your-brain
4 Digital Healthcare Act (DVG), German Federal Ministry of Health, 29 November 2019, https://www.bundesgesundheitsministerium.de/digital-healthcare-act.html
5 Ariel D. Stern et. al, “Want to See the Future of Digital Health Tools? Look to Germany”, Harvard Business Review, 2 December 2020, https://hbr.org/2020/12/want-tosee-the-future-of-digital-health-tools-look-to-germany
6 O. Ford, “10 FDA Cleared or Approved Wearable Devices that Redefined Healthcare”, MDDI, 20 September 2020, https://www.mddionline.com/digital-health/10-fdacleared-or-approved-wearable-devices-redefined-healthcare
7 J. Schoonbee, “How lifestyle data can help us personalize the sinurance industry”, ITIJ, 01 February 2021, https://www.itij.com/latest/news/how-lifestyle-data-canhelp-us-personalise-insurance-industry
8 L. Golembiewski, “Are You Ready for Tech That Connects to Your Brain?”, Harvard Business Review, 28 September 2020, https://hbr.org/2020/09/are-you-ready-fortech-that-connects-to-your-brain
9 “Bodytech – a new wave of medical devices product liability litigation”, Taylor Wessing, March 2019, https://www.taylorwessing.com/download/article-bodytechlitigation.html