Comparing Interpretation – Locum Insurance: “Normal Terms” – part 2

‘Normal Terms’ – these two words can cost your practice a lot of money. It seems ridiculous to make such a statement but it is true.

Here is an example:

You are changing your Locum Insurance cover to another provider as they have quoted a premium that is lower than what you have been paying.

You have been told that you will receive “normal terms”. To the uninitiated this suggests that everybody is fully covered. What it really means is that everybody is covered as per the policy conditions and exclusions and there can be some nasty little clauses in the policy that changes everything.

It goes like this – The Practice Manager gets a cheaper Locum Insurance quote and is told by that potential new provider that even though the practice had made a recent claim the condition that was claimed for would be covered and would be given “normal terms”. When challenged on this point (the practice manager has been alerted to a particular policy exclusion) the potential new provider admitted that as the policy had a “pre-existing condition exclusion” there would be a period before the condition that was previously claimed on could be covered. This situation did happen and the Practice Manager made the right call and kept the cover they had.

Remember – The policy conditions and exclusions determine what locum insurance cover you have. If it seems too good to be true it probably is.

Medical Insurance Consultants

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.

Completing A Medical Confirmation Form on Behalf of Partners/Staff

Here is the classic case through the eyes of a Practice Manager:

Just filled out the form for our Locum Insurance and as far as I am aware none of the individuals that are being insured have had any anything wrong with them in the period requested. Insurance now in place – On to the next job.

Some months later – One of the partners has been off sick with a stress related condition for the last 3 weeks and it looks as though he will be off for another 8 weeks at least. Contacted our insurance broker/company and requested a claim form. The claim form has been completed and has been sent to the insurance broker/company. I am now waiting to be paid as we are already employing a locum.

To my amazement I have received an email/letter from the insurance broker/company saying that they will not be paying the claim due to non-disclosure. I now find out that the partner who is off sick had suffered from a stress related condition in the preceding x months. Not a happy bunny at the moment to say the least!

The partners reason for not disclosing this to me  – He/She did not think that the previous condition warranted a mention.

Make sure you stress the implications of not fully disclosing medical condition.

Comparing Interpretations – Locum Insurance

Have you ever noticed that when companies compare their product against a competitors theirs always appears miles better.

What is the comparions based on?  INTERPRETATION is the word.

I recently saw a Locum Insurance comparison which stated that their comparison was “based upon their interpretation” – basically this is a “get out of jail” phrase that enables them to write more or less what they want to compare, as well as extracting selective wording from the Locum Insurance policy.  A good example of this relates to claiming for a mental illness – according to the comparison the person claiming “will have to see a psychiatrist” whereas the policy wording actually says “will have to see a psychiatrist when requested by the insurer”.  Two totally different meanings.  This also doesn’t mention that the insurer has the general right within the policy to request the insured to provide all information required for the claim and co-operate with insurers request in order to administer the claim (i.e. attend a medical examination).

Beware of comparisons!!

Always ask the specific questions you want answered.

An interpretation of an interpretation made on Wednesday 21st May 2014!!!!

Medical Insurance Consultants

MIC Surgery Insurance awarded 5 Star rating

We are proud to announce that the MIC Surgery Insurance policy has been awarded a 5 Star rating by Defaqto, the independent financial rating company.  This rating confirms to our clients that the cover we offer is at the top of the pile, backed up with excellent customer support and advice.

We will not stop there however, as we are constantly looking at ways in improving the cover we can provide without costing our clients more in premium.  If you don’t have a Medical Insurance Consultants Surgery Insurance policy why not contact us on 0800 163870, email us on [email protected] or visit our website www.m-i-c.co.uk to receive your quote.

Claiming and Changing – Locum Insurance

A practice claims £55,000 for an illness to an insured GP on the practice Locum Insurance policy and they have just returned to work. The practice then decides to place their Locum Insurance with another provider who offered a lower premium. Not only is the premium cheaper but the new insurer says that they will cover the GP without exclusions or conditions for the illness that was just claimed for. I just hope that the illness doesn’t return!  The devil as always is in the detail and the level of transparency your insurance provider gives you.  Seeing the policy wording does not necessarily mean you understand what it is saying and I would always recommend asking for an explanation to points you are concerned about.

Cost should not always be the main driver behind selecting your policy, as a history of having your claims paid is by far the best indicator of a good policy.  After all that is the reason you took the policy out in the first place, not just to show that you have got a policy for less than last year!

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.