Medical Insurance Consultants (MIC) was one of the first if not the first to introduce a Locum Insurance Policy with continuity of cover. Before this there were Locum Insurance Policies on the market that offered Permanent Cover throughout the term of the policy (like a PHI policy but with a limited benefit period of 12 months and to age 60 or 65) and Annually Renewable Cover where the terms and premium were assessed each year. The choice then was very simple – pay a fairly substantial premium each year with the Permanent Locum Insurance Cover, but know exactly what you were covered for, or take the risk each year with the Annually Renewable Locum Insurance Cover, where there were potential changes in the cover and premium.
I decided that MIC could produce a policy which picked the best parts from each policy. With our specialist underwriters the MIC Locum Insurance cover with ‘continuity of cover’ was born. The policy was annually renewable, but this time it contained a clause that stated that the terms would not be changed so long as the policy remained in force. The cost of this policy was considerably cheaper than the Permanent Locum Insurance policy, but offered many of the benefits.
It took several years before similar Locum Insurance policies were produced by other insurance providers. However, what was the point of producing a policy identical to the MIC Locum Insurance policy? The cover needed to be expanded from the essential Sickness and Accident cover that was there from the start. Now we see cover for delayed flights, funeral expenses, suspension and revalidation, paternity and maternity all of which have very little if anything to do with a Sickness and Accident policy.
Just ask yourself this question – out of all the covers that I have mentioned, which one are you most likely to need? The answer (reviewing claims statistics) is Sickness cover and yet practices seem to be won over by the “add ons”. It is therefore crucial that the Sickness cover is as you want it in terms of the amount and the benefit period. Each partner and each member of staff can have different benefits and terms, thus giving the cover that is needed. The average benefit that a full time GP is insured for is around £2500 per week and there are no signs of any reduction in Locum costs.
How can you choose the right Locum Insurance cover for you? With difficulty, as there are now so many providers all wanting a share of the “Locum Insurance Pie” and all offering Locum Insurance policies all of which have the basis of the original MIC Locum Insurance policy – Continuity of Cover (although the term has been hijacked to mean different things in other policies). The “add ons” or “whistles and flutes” as one practice manager called them has to be paid for and do not come “free of charge”. The cost has been included in the policy premium – it just has not been shown as a separate premium.
Where do we go from here? I suspect that very shortly the wheel will have turned a full circle and that Locum Insurance cover will be for Sickness and Accident only, thus reducing the cost of the cover and going back to the original MIC Locum Insurance policy.
What And Where Are The Pitfalls/Problems?
The biggest problem that I have seen over the last few years has not been the type of policy or even the cost of the policy, it is how sales people interpret the cover offered by competitors even to the extent of producing comparisons which include competitors details that are out of date. It undoubtedly makes their offerings appear even better. There will of course be a “get out of jail statement” that says something like “details are based on our current understanding” of the competitors cover. In addition, it is not unusual for two totally different Locum Insurance policies to be compared, but with the suggestion that they are both the same type.
What Are The Types Of Locum Insurance Policies Currently Available?
- Option 1 – A permanent policy that is medically underwritten and the terms for the cover are given and will not change for the life of the policy. The premiums for the cover can be age banded or index linked. This is the most expensive option.
- Option 2 – An annually renewable policy that is medically underwritten and has continuity of cover (or as we now call it Health Protector Promise), so the underwriting terms applied remain unchanged at renewal.
- Option 3 – An annually renewable policy that has continuity of cover. There is no medical underwriting as the cover is established using a pre-existing condition/prior absence exclusion, ruling out any condition that has occurred for more than x number of days in the last y years, as well as other terms.
- Option 4 – An annually renewable policy that does not cover any pre-existing condition that may have occured, therefore covering only new conditions. This is the cheapest option with the least cover.
When you do get a comparison or compare a policy yourself, just make sure that the policies are all of the same option type above. What is the point in comparing Option 1 with Option 4 above?
Just to confuse matters even more, I have seen a clause in a Locum Insurance policy that enables the terms of the policy to be changed in event of the “loss ratio” (premiums received v claims made) reaching a certain percentage. So much for saying that the terms will not change.
How Often Do You Need To Review Your Locum Insurance Cover?
In short there is no one answer that fits all.
If you are satisfied with your current provider, the terms are right, the premium is good and they provide you with a good service then what is the point of changing. However, if you are driven purely by cost then the next paragraph will be of interest.
If the cover that you presently have seems to go to a different insurer/underwriter every one or two years but remains with the same provider/broker, the alarm bells should start ringing. The usual reason given for the change is to reduce the premium or providing better cover. What is probably happening is that the insurers/underwriters are now getting the claims coming in and are now starting to look closely at the current premiums charged. The problem here is that changing from one insurer to another only brings around more conditions (medical underwriting/pre-existing condition exclusions etc.), a logistical nightmare when you come to claim or are currently claiming.
What relationship have you built up with your current provider? This counts for an awful lot. It should give you the confidence that you need.
One last point (forgive me for going on about it) – again I have a problem with some of the sales tactics that are used to encourage practices to change the provider of their Locum Insurance cover. We go back to the comparison, and then there is interpretation of the policy wording. On the MIC Blog you will see articles that bring into the open techniques that are used by sales people to get the business. Make sure that the facts speak for themselves rather than the sweet talking sales patter.
- Use the experience gained by companies that have been doing this for a long time. My experience and that of MIC is spread over nearly 20 years of providing locum insurance!
- Never assume that because you are dealing with/through a buying group, the Locum Insurance policy they are offering is the best available, usually it will be with one company they have partnered with, as FCA regulations are quite tight on this.
written by John Downing, Executive Director, Medical Insurance Consultants Ltd