There are two extremes which are obvious. 1) every infected liability-related injury fails to respond to all known antibiotics. In this case the claimant relies on their own immune system to fight off infection. Surgery and boosting immune competence could assist if provided in the early stages. For liability insurers there would be increased medical costs and a more severe injury to compensate. 2) when one antibiotic fails, another one is tried and works. In this case the effect on liability exposure is a marginally more severe loss to the claimant and a small increase in medical costs.
Should liability insurers be worried? The answer really depends on the rate at which resistance is acquired. Politicians paint a picture of complete resistance as if it would happen tomorrow. It won’t. Experience rated liability business can cope with inflation in its traditional manner. But if the rate of inflation exceeds the business plan tolerance then liability insurers will have a problem. Unfortunately, there is no pressure on academics and officials to provide the relevant information on rate of change. Insurers must do it for themselves.
Large Workers’ comp providers have data sets that could be used to detect change in payments related to this issue. What they know from their claims data is whether or not antibiotics were used, were they followed up by different antibiotics and if they were, what was the effect on increased payments and costs? Projecting forwards, the insurer would note which antibiotics were used and from the academic literature they would know the prevalence of resistance to that antibiotic. Inflation would follow the growth of resistance, unless new antibiotics became front line therapies. In principle, the same data is available in the UK from the compensation recovery mechanism. But is it?
Governments around the world complain that drug companies are not producing new front line antibiotics. The reason for the lack is obvious. There is no profit in it. Given that fact, governments, major global corporations and perhaps insurers should consider funding the development of new antibiotics as a risk management measure which will be in their net interests. Public efforts would of course produce drugs for public consumption. Private organisations might prefer to retain the competitive advantage that an effective antibiotic would bring – a therapy reserved for people who have invested in the firm. The political voices in insurance might consider what their policy is on privately developed drugs.
The next issue of the Radar journal will provide assistance to liability insurers.