Digital Health Services Raise Liability, Insurance Concerns for Providers

Surge in telemedicine creates liability risks as providers grapple with coverage gaps and cybersecurity threats, reveals a survey of brokers by QBE North America.
By: | November 14, 2024
doctor providing telehealth service

The rapid rise of digital health services, such as telehealth and telemedicine, is creating new professional liability risks and insurance challenges for health care providers, as per a recent survey of insurance brokers by QBE North America.

The health care landscape is rapidly evolving, with digital health services becoming an integral part of patient care. In the past year alone, 66% of health care providers have embraced digital platforms to interact with their patients. This shift reflects a growing trend where patients now view digital health services as essential for engaging with their health care providers.

“Our goal was to learn more about the level of concern clients have regarding digital health services, the types of risks impacting their businesses, and what type of insurance coverage they have in place,” said Chris Dunlavy, VP, underwriting leader for miscellaneous medical at QBE. “The survey findings show clients are concerned about the risks and they are looking for information to better understand the coverages that are available.”

Growing Professional Liability Concerns

As the adoption of digital health services surges, so do the professional liability concerns associated with these technologies. A staggering 63% of insurance brokers report that their clients are “extremely” or “very” concerned about the risks linked to digital health services such as telehealth and telemedicine. This apprehension is not unfounded, as 60% of brokers have observed an increase in digital health-related claims over the past 12 months.

The rise in digital health claims can be attributed to several key factors. Topping the list is alleged inadequate care provided in digital settings, cited by 44% of brokers as a primary risk. Following closely behind are technology and product errors, mentioned by 41% of brokers. Additionally, poor cybersecurity leading to compromised data is a significant concern, highlighted by 38% of brokers.

Insurance Coverage Gaps and Challenges

As digital health services become increasingly prevalent, potential gaps in professional liability coverage presents challenges for health care providers and insurers alike.

A staggering 84% of insurance brokers express concern that their clients may be operating without suitable coverage for digital health services. This worry is not unfounded, as only 51% of health care professional liability policies include expressed coverage for digital health services.

The problem extends beyond the mere availability of coverage. A surprising 30% of clients didn’t purchase coverage for digital health services simply because they were unaware it was available. This highlights a significant communication gap between insurers, brokers, and health care providers, QBE noted.

The level of understanding among clients regarding their digital health policy coverage is also a concern. While 69% of brokers express confidence in their clients’ comprehension of coverage details, nearly a third, or 31%, of brokers are not confident. This discrepancy suggests that there’s room for improvement for brokers to educate health care customers about their insurance needs and options in the digital health space.

When informed about the need to update their policies to ensure coverage for digital health services, clients exhibit varied responses. Half of the clients express interest but require more information before making a decision, the survey found. About a quarter of clients (27%) are ready to purchase additional coverage upon learning about potential gaps. However, 23% of clients decline to pursue additional coverage.

This reluctance could stem from various factors, including cost concerns, perceived low risk, or a lack of understanding about the potential liabilities associated with digital health services, QBE noted.

Cybersecurity Risks and Coverage

The digital nature of these health services introduces new vulnerabilities, particularly in the realm of cybersecurity. A concerning 26% of health care clients reported a cybersecurity incident in the past 12 months, underscoring the urgent need for robust protection against digital threats.

Despite this risk, only 18% of cyber or technology policies include a “trigger” for bodily injury. This gap in coverage is particularly alarming given the potential for cyber and technology incidents to cause physical harm in telehealth and telemedicine scenarios, QBE noted.

View the full report here.

The R&I Editorial Team can be reached at [email protected].

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