Budget increase kicks in tomorrow

You may or nor may not remember, but in the last budget there was another attack on insurance premiums from the Chancellor of the Exchequer.  Not as you may wish from the insurers, unfortunately the increase is for all policy holders on the standard rate of Insurance Premium Tax.  We first saw it increase from 6% to 9.5% and now it will increase to 10% from the 1st October 2016.

If you are looking to take out a policy now would be a good time to achieve that little extra saving.  At MIC we always try and mitigate the increases imposed upon our clients as best we can on policies such as Locum Insurance or your mandatory Surgery Insurance and Medical Indemnity cover.

Get your quote before the price goes up.

GP’s Indemnity costs for extended/weekend working hours

Recently read an article in Pulse titled ‘ GPs paying £35 per hour for indemnity fees as LMC leaders vote for full costs to be covered’.  Interesting read, however, it included some muddled examples perhaps perpetuating a common misconception regarding the medical defence unions.  To clear it up, the three main medical defence unions, MPS, MDU and MDDUS are NOT insurance companies, nor are they providing insurance cover in respect of the individual indemnity they offer to members.  They are mutual organisations who offer membership and as a part of that membership they could make available their support if needed.

In my time as an insurance broker I have provided many an medical indemnity insurance policy for healthcare entities and individuals and in the vast majority of cases they thought that the defence union’s cover was insurance.  Of course I put them right and in some cases they were quite shocked at the lack of transparency and recourse available to them in relation to a defence union.

The rising cost of medical indemnity for GP’s has been on the cards for some time now, but with their numbers accounting for a good proportion of the defence unions membership costs are being spread.  What I mean is that the risk spreading nature of the defence unions works to large respect, however, it is distorting the actual medical indemnity costs of many GP’s out there.  Out of hours work is in it its nature a higher risk element of GP’s work, however, extended working hours is not out of hours, as those patients seen are registered at that practice.

My experience of the defence unions of the last 10 years or so is that they are becoming more heavy handed with their members.  Perhaps a clearing out exercise to try and off load those individuals that no longer fit their membership criteria.

So should indemnity go over to the crown?  You may think I am bias in my opinion, but I don’t believe this to be the best option for GP’s, as the cover is very limited and not always in the best interests of the GP involved.  What is required is competition in the market.  It is currently dominated by the three defence unions, offering cover on a discretionary basis, unregulated and not accountable to anybody outside of the unions.  Many other countries actually put in a minimum requirement for indemnity cover and that it is insurance based, therefore, regulated and accountable in a court of law.  I know competition can sometimes be a dangerous word in areas of healthcare, but if you think about it, many already view the indemnity as insurance cover.  The only difference is that it is not working in a competitive market, such as the insurance market that is global and highly competitive in it nature.  Perhaps it is time that the indemnity question is revisited, as the last outcome only rubber stamped the current method, but many things have changed since then.

Medical Insurance Consultants are able to assist you individually and as an entity/company in all indemnity requirements.  Call us today on 0800 163870 or visit our website www.m-i-c.co.uk

How Much Longer Will It Keep Going? – Medical Indemnity costs

The ways things are going at the moment the chances of reducing the amount that individuals pay to Medical Defence Organisations for medical indemnity or malpractice cover, over the next few years, are very slim indeed.  It seems that the Consultants who provide a good professional service to their patients without any problems are being penalised by those that are not so good and do have problems.  A fairly sweeping statement, but one I am sure that is at the root of a problem that will not go away.

Why should trouble free consultants not benefit individually when they have an clean track record?  Does this ring a bell – do the words co-operative or insurance spring to mind? They should do because this is one of the simple definitions defining co-operative and insurance.  But there is light years difference when comparing these two words.  One gives you a guarantee – the other does not.

Which one would you choose and which one do you think costs less? You would have thought that the medical indemnity offered by the cooperative would cost less.  In fact it is the insurance guaranteed cover that in most cases is cheaper.  How can this be?  It is not rocket science!  Individuals are assessed as individuals and from there insurers are able to establish the “risk factor”.  If say a consultant has not had any claims he/she will obtain a better premium than somebody (in the same speciality) who has had claims. The greater the risk to the insurers the greater the premium will be.

The other point to make is that the insurance cover gives you “a contract” that states exactly what you are insured against and the amount that you are insured for.  The other is discretionary.  Insurance provides guaranteed recourse options, the other does not.

How long will the “bulk assessment” continue?  The answer is – so long as the people in the co-operative are prepared to fund the people who make claims.  There is a good comparison in everyday life – Would you expect to pay the same premium, having not made a claim for the last 10 years, as a newly qualified driver driving the same type of vehicle as you?  I suspect you would not be too happy if you did.

So, how do you feel about the amount you pay for medical indemnity cover?

Contact Medical Insurance Consultants to discuss your medical indemnity options.

Is there a shift in thought over Private Practice Indemnity cover?

For a long time now when asked who provides your medical indemnity cover the answer was simple, it was either the MDU, MPS or MDDUS.  It was a given that you were with one of the traditional mutual defence bodies, but have times changed and what other options are available?

The three traditional medical defence bodies have been around for a long time and operate in a unique way when compared with the insurance market.  Cover is provided by an occurrence based membership, giving discretionary assistance in the event of a claim to the member who requests it.  Much is made by the defence bodies of the flexibility and unlimited nature of this type of cover, however, is it all it is cracked up to be?  My experience is in the insurance market, working with many types of healthcare individuals and businesses for their property, liabilities, legal, personal and medical indemnity insurance, allowing me to question certain aspects of the cover compared with indemnity insurance cover.

The first point to consider is the basis of cover, this being the ‘discretionary’ basis given at the discretion of the board.  It contrasts quite significantly with the contractual obligation provided under an insurance contract and affords little recourse to the member should anything arise the member is not happy with, such as assistance not being provided.  This won’t happen I hear you say, but unfortunately it does happen and was referenced to in the MDU press release dated 14th December 2010, whereby it mentions two members who were first told they would get assistance and this was later withdrawn.  No reason was given for this, as according to the membership agreement, they don’t have to tell you.  Insurance contracts don’t and can’t operate in this manner, as it goes against the Financial Conduct Authority regulations and would be a breach of contract, with recourse options available to you through financial regulatory bodies and the courts.

The second point is the notion of unlimited cover as part of the membership of an MDO.  Is it really unlimited?  Simple answer is no, as with any mutual organisation the amount of cover is limited to the financial assets of that organisation, but when you offer discretionary cover you can say pretty much what you like.  The MDO’s are understandably very protective of their claims history, however, with the majority of membership fee’s increasing each year above inflation the funds available aren’t keeping up.  A medical indemnity insurance policy gives a defined limit of indemnity usually up to £10,000,000 per claim and policy year, which is more than enough to satisfy private hospital requirements and very often with a zero excess, the same as the MDO’s.

The third point is about cover when moving between medical indemnity providers or switching from occurrence based MDO cover to a claims made indemnity insurance policy or vice versa.  Occurrence based means that you are covered for circumstances that occur while you were a member, albeit on a discretionary basis.  A claims made policy provides cover for circumstances notified during a policy period, therefore, moving from an MDO to an insurance contract you would be covered by the MDO for circumstances during your membership period and any circumstances notified after this would be covered by your insurance policy.  The insurance policy would then cover you for as long as it is renewed for circumstances that occur from the date you left the MDO, known as retroactive cover, and is shown by the retroactive date on your policy.  Switching your cover between insurers is a simple process, as the new insurer will follow the retroactive date on your policy, providing seamless cover, similar to switching between MDO’s. I have heard a lot of comments from clients about how they have been told by their MDO that they would be left high and dry by an insurance policy if they decided to move back to them.  This is not that simple, as when or if you decide to move back to an occurrence based discretionary membership from an indemnity insurance policy it is an obligation of the new provider to ensure that you are not left without cover.  The MDO, if it wants you back, should provide cover for the periods that the insurance policy was covering, the same that would happen when you switch insurers, and when working on a discretionary basis this should be a simple task.  If for some reason the MDO will not give this cover then your insurer can offer run-off cover for you, but if the MDO is not willing to help why are you going back to them in first place.  I have found with our clients that to date none have requested to move back to the MDO’s, they have either remained with us or moved to another insurer.  A good medical indemnity or malpractice insurance policy will also provide run-off cover when you retire from private practice or die, covering you and your estate should a claim arise.

It may be that you like the reassurance of being able to contact your MDO for advice on matters, but this is no longer the unique aspect of the MDO’s as insurers are now providing medico-legal helplines with their policies allowing you to talk medico-legal experts when you need advice.

A more competitive and active indemnity market can only be to the benefit of consultants in private practice, allowing more choice of provider and the costs they have to bear to carry on practising.  Hospital groups are realising this and putting support behind insurance based indemnity policies, as they can provide that extra level of certainty that the MDO discretionary cover can’t.  Each method of cover does have its own merits and it is down to the individual to decide what elements they deem important when deciding where they place their indemnity cover.  Who knows, it may be that this decision is taken out of our hands and the UK follow the vast majority of other countries in requiring the cover to be on a contractual level of cover, not just discretionary.

If you would like to see which may suit you best, contact Medical Insurance Consultants (MIC) on 0800 163870 or click for a quote here.

Dentists Indemnity Cover – Discretionary or Contractual?

There have been quite a few articles recently on the merits of indemnity arrangements for dental and medical professionals.  The providers of indemnity, both defence organisations and insurers, pointing out the shortcomings of each others proposition.  Who is right and who is wrong?  Simple answer is they are both right, but being transparent on the facts is a different matter.

It does seem that the insurance option is getting a bit of a bashing currently, but is this justified?  Well one of the problems I can see in the comparison the MDO’s are making at present is the way in which they treat the whole insurance market/policies the same.  Creating a picture that insurers will cover you year by year with high premiums to pay should you wish to leave to go to another provider.  This is not correct, as any good insurer or broker will ensure that the cover you get year on year provides cover for you from the point you first took out an insurance policy.  This is shown as the retroactive date on your policy and means that your policy will repsond to claims notified during a period of insurance for incidents that occurred after this retroactive date.  Similar to the way in which MDO membership will cover you instances that occur from when you were a member (occurrence based cover).  An insurance policy can also provide cover when you retire or die (run-off cover), usually at no additional premium as this would have been rated for in the cover you had in the previous years.  If in doubt just ask if it is included.

I think a key point here is the level of transparency to each option, with very little from the MDO’s as they are not required to do so legally.  I feel there is a degree of nervousness buidling within the MDO’s as the appetite of insurers for Medical Indmenity insurance is growing, with more and more competitive and comprehensive schemes coming on stream each year.  Personally I am still at a loss as to why the UK still accepts MDO membership as adequate cover, when it is at the descretion of the MDO whether or not they will provide cover to a member.  The lack of financial regulation of the MDO’s also raises concerns for me, because if there were a deterioration of the balance sheet for these organisations we may find out too late or its members will be hit with large increases to make up the shortfall.

I would say however, each has its merits and insurance is not right for all as is the case for discretionary cover.

Simon Downing – Managing Director MIC Ltd

The MDU change their mind again!

Some of you may have heard recently about the Medical Defence Union switching the way in which they provide indemnity cover to its members again. You may have also not even realised that the MDU have been providing indemnity to its members since 2000 via an insurance policy.

Why have they done this? Well this is not too clear from their press release or the ‘we want you back letter’ they are sending out to ex-members and those thinking of moving to another insurance provider from the MDU. Their reasons for switching in 2000 and their press release in 2010 heavily contradict the reasoning behind switching back to discretionary cover as of the 1st April 2013. They say that discretionary is now the best way to offer this cover to their members, yet in another breath, as shown in their December 2010 press release, ‘if there is no legal entitlement to indemnity, as is the case with discretionary indemnity, then there is a risk that deserving patients may go uncompensated.’ They then go on to add, ‘You are not allowed to insure your house or home with discretionary indemnity and it is unthinkable that discretionary indemnity remains acceptable for clinical negligence.’

Well I am not sure about you, but this has confused me. Which method is the right one to use to indemnify medical and dental professionals? The answer is that both have their merits, it just depends on which merits you hold as being the most important to you. Discretionary cover holds itself up as being flexible in the manner it can support someone, which is true, but then look at the word discretionary. There is no legal obligation to provide support and I have heard many people say, ‘of course they will provide support’. Unfortunately, this way of thinking of it is not actually true. There have been many occasions where support has not been provided, and the MDU mention some of these in their 2010 press release. Why haven’t they provided support? Well they don’t have to tell you, is the answer to that.

Here lies the flaw in the discretionary indemnity model. Accountability and transparency is almost non-existent within the mutual discretionary model. Members have no recourse options if they feel hard done by and no regulatory body to impose sanctions or fines. The majority of other EU and Non-EU countries realise this fact and have pushed through the requirement to hold an insurance policy, rather than relying upon descretionary cover. Another point that comes from this is how do you know if the MDO you are paying your subscriptions to is financially secure? They are not regulated, they don’t have to publish their results and they are not accountable to any authority.

A recent client of ours incepted their indemnity cover with us on the 1st March 2013 and all was fine. They then received the letter, referred to earlier, from the MDU which raised points about the cover they were going to and how bad it was. Again, forgetting that they themselves had been providing such a policy for he last 13 years, and making assertions that ‘claims made’ policies ‘lock you in until retirement’, ‘one year’s cover for one years premium’ and ‘claims made subscriptions start low but will eventually rise’. All of these sound bad to the client, but are they accurate in reality? Simple answer is NO!. One years cover for one years premium is inaccurate, as claims made policies have a retroactive date that provides cover for claims notified during the period of insurance that may have occurred after the retoractive date. This is exactly what happens when someone moves from the MDU, as the new claims made policy will have a retroactive date back to the year 2000, when the MDU changed to a claims made policy. Claims made policies lock you in until retirement. Do they? NO! Clients who move from us or the MDU to the MPS or MDDUS have to simply ask the new indemnity provider to cover the previous period of cover. This is not a difficult question and it something claims made policies do all the time.If the new provider will not cover them then you may have to purchase run-off cover for this period. But if they want you back then they have to work to your needs, not theirs. Simple market forces. Claims made subscriptions start low but will eventually rise. Do they all? NO! It is a simple matter of rating and underwriting. Insurers don’t walk blindly into insuring areas, they gather information to understand the market, the trends and future activity. Insurers also know what competition means, an example is the current Consultants indemnity scheme we use for our clients hasn’t seen a rate rise in 4 years. I would like to see an MDO’s subscription rates over the last 4 years, as I am sure there would be significant rises in subscriptions. The MDU here are relying upon their experience solely, which raises the question, is the way they do it the best way for individuals. Clearly not, as a lack of individual assessment means a higher charge back to that individual.

Take a look at how Medical Insurance Consultants can help you cover your indemnity on a legally binding insurance contract. View our summary page here.