Medical device manufacturing is a complex and wide ranging activity, covering everything from contact lenses to catheters to pacemakers.
The recent decision to recall insulin syringes in the US, on sale in department store Walmart, highlights the risks involved in the manufacture of medical devices.
Tyco Healthcare Group recalled the hypodermic syringes after discovering a labelling mistake. This could have led to patients receiving more than double the intended dose, according to the US Food and Drug Administration.
In the UK, recent alerts by the Medical and Healthcare products Regulatory Agency have involved wheelchairs and feeding pumps.
The introduction of new technology—in both traditional medicine and cosmetic surgery—and widening supply chains could introduce new kinds of exposure.
“As any product becomes more sophisticated, there are more things that can go wrong,” said David Palmer, Director of Crisis Management at Aon UK. “Ironically, a lot of the sophistication actually involves safety features.”
Stringent oversight
The medical device industry is extensively monitored. Quality standards for the manufacture of medical devices are much higher than in other fields, explains Palmer.
Liabilities for non-invasive medical devices don’t appear to be increasing, according to Stuart Sutherland, UK casualty manager for XL Insurance. He puts the good track record down to the stringent oversight.
The trend in outsourcing could introduce new pressures, however. European or US-based manufacturers need to ensure that parts that are subcontracted overseas comply with all the necessary regulations.
“Recall rates for these devices could increase if the manufacturing takes place outside countries with high compliance standards,” says Sutherland.
Longer-term issues tend to surround the use of new technology, particularly for invasive devices, according to James McHugh, regional casualty manager at Catlin in London.
“Use of exotic metals and new variations of silicone that weren’t used previously—that’s the kind of exposure that can develop its potential over several years.”
Innovation and risk management
Coronary artery stents are one example where new technology can lead to new risks.
These stents are used to treat coronary disease and they are combined with anti-clotting agents. These agents ensure blood clots don't form in the artery where the device is situated.
While newer versions have engineered out some of the adverse side-effects associated with older models, patients are now developing long-term thrombosis several months after the stents have been implanted, explains McHugh.
New products may be thoroughly tested in the laboratory, but often it’s not until they are in use that a true risk profile becomes apparent.
Longer-tail risk
In the 1980s there were major lawsuits in the US as a result of damage caused by a women’s contraceptive device called the Dalkon Shield. This demonstrated the damage and potentially huge expense associated with medical devices.
There are more unknowns connected with invasive devices, adds McHugh. This is where medical device underwriters expect to see the longer-tail risk. But any new technologies are subject to intense scrutiny.
“Anything that’s really new will be right at the top end of regulatory hurdles,” he says.
In such a specialist field, underwriters need to have a good grasp on the science and technology in order to make the right assessments.
“I’m not a scientist; I’m an underwriter first and foremost. To be proactive and address changes in risk is something I have to keep constantly abreast of,” says McHugh.
