A guide to insurance for medtech businesses

What insurance do medtech businesses need?

Written by Ella Henderson

Ella Henderson specialises in helping medtechs & healthtechs secure tailor made insurance, to ensure they are covered for the unique risks they face as they scale.

Medtech companies are constantly finding new and complex ways to innovate. It is a space that has seen serious growth over the past 10 years.

As businesses in the medtech space continue to see huge growth, their exposure in terms of risk also increases. In this guide we will look at the common risks encountered by medtech businesses, what insurance medtech businesses need and the most important factors in securing appropriate cover.

Find out more about how we help businesses in this industry, and get in touch with our expert team here

1

Cyber and technology errors and omissions

For those using bleeding edge technologies the reward for success is high, but so too is the risk. Tech errors and omissions is designed to cover providers of these products and services, including for instances such as data breaches.

2

Product liability

For equipment and apparatus, this cover protects your company in situations where products are found to be defective whether you are the manufacturer or supplier.

3

Medical malpractice and bodily injury

An essential cover for medtech companies, providing protection in instances where your company was considered to be negligent in a way which results in physical or mental harm.

4

Intellectual property insurance cover

Patents and IP rights are vital and valuable assets to medtech companies. Intellectual property insurance will cover you should you need to defend an IP lawsuit, as well as if you need to pursue one.

Medtech insurance in more detail

Find out more about insurance for medtech businesses, the risks to cover and what to look out for in a policy.

Handling medical data

We are experiencing a hard cyber insurance market. Premiums are increasing, and limits are increasingly being restricted. This means tight cyber security controls to protect personal data records are more important than ever in order for businesses to secure adequate cyber cover.

When you add medical records into the equation, where it’s not uncommon for a medtech company to hold millions of records of very personally identifiable data, insurers need to see tight encryption controls to provide cover.

Having cyber as part of your insurance package is paramount when protecting the personal health information of your customers. In addition, if your business is subject to a ransomware attack it can often take weeks to resolve, this leaves a lot of room for lost revenue as your company works to resolve the event. Your cyber insurance will cover the cost of getting back to where you left off.

Meeting contractual requirements

In order to enter into a contract with another company there is often a number of insurance requirements in order to satisfy the contract. This is typically to ensure that the companies entering the contract are not picking up liability for one other as a result.

In the UK a lot of medtech clients tend to partner with the NHS, the free healthcare service in the UK. There are many benefits to doing so, such as grants and also huge exposure. Given the enormity the NHS entity is, they have specific requirements when it comes to insurance - especially given the high exposure to claims.

When going into contract with the NHS, there is a strict requirement for £5m Professional Indemnity and £5m public and products liability.

Non-NHS contracts may have varied limit requests, however it is very often the case that in these instances there is also a requirement for a minimum of £5m with little wiggle room to purchase a lower limit.

The risk of bodily injury

Appropriately covering a medtech company had previously been a grey area in the insurance world. You either get a standard technology policy or medical malpractice coverage. A medical liability policy would typically exclude any failure of the tech, and vice-versa, a tech policy would not include bodily injury cover.

Over the past few years, insurers have combined the two to marry the covers together in one policy. This ensures both the bodily injury side and tech side are both proportionately covered if anything were to happen.

Case law is growing in this space and so claims can easily land with software suppliers who don’t feel they have a bodily injury exposure. A lot of medtech clients will go for a straightforward technology insurance package, thinking the downtime of their app (or other reasons) would not lead to a bodily injury claim.

A claim to do with system downtime or a cyber attack can result in a bodily injury claim, or at the least your company being named in a lawsuit. For example, with the rise in remote consultations, if your app were to stop working, for whatever reason, a patient may not be getting the service they need in that instant which could result in bodily injury such as a late and crucial diagnosis missed. Or, the wrong prescription being sent to a patient due to an error in the system.

Intellectual property rights

MedTech is a research heavy space and with this, comes an increased need to protect a company's assets and creativity. Patents and IP rights are vital and valuable assets to medtech companies, and it is equally vital to ring-fence such assets from interference by competitors. It is intellectual property rights that set a company above others, where they can carve out their own creative area. It is also key to obtain intellectual property rights insurance within your policy to protect your company's unique trademark and assets.

This cover is something we would highly recommend for your business especially given the rapid innovation we are seeing in this space globally. It is crucial to obtain as a smaller medtech business to fend off the big players from taking your intellectual property.

On the other foot, the key player in the covid vaccination roll-out, Moderna, chose to waive IP rights to the covid-19 vaccine, allowing researchers in South Africa to copy the vaccine. While an extraordinary breakthrough on the path to mass-inoculation across the developing world, an equally extraordinary breakthrough in the patent debate, by allowing the world to benefit from their research.

How we work with medtechs at SuperscriptQ

The healthcare industry is digitising, and with that, the risk landscape is transforming. SuperscriptQ supports medtech companies who increasingly require bespoke insurance to protect themselves against incidents such as breaches of sensitive healthcare data, errors and omissions in the provision of their technology platforms, and occasionally claims for bodily injury.