Insurers around the world must be wary of the risk of legal action being brought due to inappropriate advice provided by health technology and apps, including wearable devices.
The warning appears in Swiss Re’s annual Systematic Observation of Notions Associated with Risk (SONAR) report.
The global reinsurer warns insurers could face losses arising from litigation against manufacturers in cases where algorithm-bias on devices such as wearable health technology and apps leads to inappropriate medical advice.
If this results in the user incurring injury or another patient impairment, then the resulting casualty claim awards could be “substantial”, it said.
The report added that the issue was further complicated by the fact that interconnected products do not fall neatly within conventional product liability rules, meaning it is not always clear where responsibility for device malfunction lies whether this is the manufacturer, system designer, software provider or even the end-user.
Peter Forshaw, partner at law firm Weightmans, told Health & Protection suppliers and manufacturers and their insurers could become embroiled in costly, multi-party product liability litigation involving the need to prove the occurrence of, and responsibility for, the algorithmic bias or failing of the technology concerned.
Forshaw says the potential value of such claims will be influenced by the personal characteristics of the individual wearer.
“In many cases where a claim can be made out, the injury or consequences will be de-minimis, or treatable and therefore any awards will be relatively small. However it is not inconceivable in the most serious of cases, for example, those of a young age who suffer fatal or serious long-term medical complications which might otherwise have been averted, that claims for six or seven figures could be advanced.”
But Forshaw points such litigation is costly, with complex technical issues to resolve.
“Causation will be particularly problematic for a number of reasons. The life-changing injury will often be in the context of a pre-existing genetic medical condition and therefore there will be complex argument as to whether algorithmic bias or failure of the equipment has played any material part in the outcome.
“It will also be necessary to prove that the technology itself has failed as opposed to being ‘let down’ by the surrounding infrastructure. For example, most wearables rely on Bluetooth or wireless technology to link and transmit data to and from smartphones or other devices so the ’cause’ may be the wifi going down rather than the wearable tech itself.”
Daniel West, product liability partner at law firm BLM, told Health & Protection there have already been cases in the US where healthcare apps have had to be recalled as they were not calibrated correctly.
While product failures can result in casualty claims for inappropriate advice, West explained that cases connected to device failures are normally pursued in the UK either under the Consumer Protection Act 1987 on the basis that the product contains a defect, or for breach of contract on the basis that there was breach of the implied term that the goods supplied should be of satisfactory quality.
But West added that problems can arise when a product is not considered to be a tangible item.
“It’s the reason that the Consumer Rights Act introduced new protections relating to the supply of digital content in October 2015,” he said.
“The European Commission also recently considered the implications of emerging digital technologies and raised concerns about the applicability of the current laws to interconnected, digital, autonomous and intelligent products.”
And the problem is exacerbated by the fact there is currently a lack of clarity as to what level of safety a person might expect in an industry where it is generally accepted that software will contain bugs and will be routinely updated, West said.
“If a product can be changed throughout its lifespan, via updates or AI, then should we assess its safety at the time it was supplied, as is the case in more traditional product claims, or later?” he continued.
“When considering risks, insurers should make sure they are aware of the extent to which their customers supply smart products including their approach to security, the extent to which they keep their software updated and the potential for the product to change over time.”
The Swiss Re report also warned about the likely significant fall out from Covid-19 on global populations through shorter lives and increasing disability and critical illnesses.