Craig Mounser, practice leader for medical technology and life sciences at Travelers Europe, explains the sector’s opportunities and risks and shares how Travelers is meeting evolving demands
As populations live longer, demand is skyrocketing for innovative healthcare solutions, treatments and diagnostic tools to help people extend their healthy years. The medical technology and life sciences sector is booming as a result, with nations investing in research to help them meet the moment.
The UK trails behind only the US in budget allocation for health research and development (R&D) as a percentage of gross domestic product. In 2022, the UK’s business enterprise sector performed £9bn of pharmaceutical R&D, representing 18% of all such work in UK businesses that year.
Innovation-friendly region
Both the UK and Ireland have leading research institutions partnering with the sector to drive innovation, develop talent and attract global life sciences companies.
Consequently, the sector contributed over £94bn billion to the UK economy and employed 280,000 people in 2021. Ireland hosts nine of the top 10 global medical device companies and several leading biopharma firms.
To drive further momentum, the UK government created Life Sci for Growth, a £650m investment package to support the UK’s position as a science superpower.
Last year, the sector generated £2.9bn in private equity investment. In Ireland, a competitive corporate tax rate and strong regulatory environment have attracted global pharmaceutical, medtech and biotech companies. Venture capital investment in European life science companies has increased steadily since 2016.
Balancing opportunity and risk
It’s an exciting time for the sector as artificial intelligence (AI) and economic growth fuel opportunities, but risks abound. At Travelers, we’re adapting by expanding our medtech and life sciences appetite and enhancing our offering. We’re investing in underwriter education to strengthen partnerships with clients as their needs change.
We’ve expanded our team and will do so again as the sector evolves.
AI is a prime example of the opportunity and risk emerging in the sector. The technology analyses medical images faster and more accurately than humans. It can help predict patient outcomes, enabling preventative care and early intervention. AI-supported surgical tools perform highly precise, less invasive procedures with quicker recovery times and fewer complications. In the background, AI helps inform healthcare professionals’ decisions.
But there are risks. Medical AI processes vast amounts of patient data, sparking concerns about data security. Medical data breaches could erode patient trust in the healthcare system. If AI algorithms are trained on biased datasets, they can perpetuate inequalities in healthcare.
AI’s benefits to medical technology likely outweigh its disadvantages, but careful monitoring is needed. As people age and demand new support to manage their health, the ongoing analysis of benefits and risks will be critical.
Travelers has been insuring this sector for 40 years and has a history of protecting AI companies. We will continue to follow developments closely so we can help clients benefit from emerging opportunities.
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