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.
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