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14th December 2010, whereby it mentions two members who were first told they would get assistance and this was later withdrawn.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.