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Here at Servca, we understand that the Medical Indemnity market can be a very overwhelming place. It’s hard to know where to go and whom to trust. Sometimes it can be very hard to tell what it is you actually need in the first place. Indemnity comes in different shapes and sizes, dependent on various factors, including medical speciality, treatments provided, and number of patients seen.
Another way of looking at it is how much exposure (of a claim) there is to the indemnifier.
In the UK, it is a legal requirement to hold appropriate Medical Indemnity. Within the NHS, the Crown extends Indemnity for negligence, but there needs to be additional cover for regulatory or disciplinary hearings. In private practice, Indemnity needs to be arranged ground up (to include claim compensations).
There are various Indemnity providers, but not all coverages are equal, and importantly not all coverages extend guaranteed cover. If Indemnity is not adequately arranged, it could leave you personally liable to pay for defence costs and even claims compensations.
Therefore, it is essential to understand the different options available to you and the main differences between ‘Discretionary Indemnity (through a Medical Defence Organisation) and ‘Contractual Indemnity’ (an insurer).
Discretionary & Contractual: What do they mean?
Discretionary Indemnity is coverage provided by a Medical Defence Organisation. As suggested, this type of Indemnity is at the discretion of the Medical Defence Organisation and therefore it is not guaranteed to be provided if a claim is made. If the Defence Organisation does not accept a claim, the medical practitioner will be personally liable for any claim-related costs.
On the flip side, Contractual Indemnity is coverage bound by a contract. This is provided by a commercial insurer through a specialist broker, like Servca. The majority of these contractual policies work on a claims-made basis, covering you for any claim made during the active time of coverage.
So, in short, Discretionary Indemnity means there is no guarantee your insurer will pay-out, meaning you have to pay out of your own pocket; whereas, Contract-certain Indemnity means you have guaranteed cover from your insurer within the terms of a policy.
Claims Made Vs. Claims Occurred
You will often see various insurance clauses and terminology on your quote documents and insurance contracts. It is essential that you understand exactly what your insurance policy covers you for and for what periods, as this can often be the deciding factor in a claim being paid out or rejected by insurers.
A claims-made policy is an insurance policy that covers an insured for claims on active policies, regardless of when the claim event occurred. Medical Malpractice and Professional Indemnity are ‘claims-made’ insurance contracts. Therefore, if the policy stops, gets cancelled, or lapses, so does the cover. For this reason, ‘run off’ cover should be purchased when you/your business ceases to trade/work, either due to the closure of a limited company, partnership dissolution, or retirement.
However, claims occurring policies will respond to the claim regardless of when the claim is reported, even if you have changed insurers, cancelled or lapsed the insurance policy. This is a rare type of insurance coverage, as the insurers have a long- tail exposure, meaning that they are covering you for many years in advance in the event a claim is reported. It is also important to note that if you have an occurrence policy, it is still up to the Medical Defence Organisation whether they do or do not provide any representation, legal costs, or claim pay-outs.
How does this affect Medical Indemnity Cover?
Contractual Indemnity will always cover you for claims agreed within the contract, whereas Discretionary Indemnity policies can be selective, leaving you responsible for paying for whatever they refuse to cover.
One of the reasons you may want Indemnity in the first place is to protect you from devastating financial losses in the event of a very serious claim. Policies are agreements where an insurer agrees to pay off a claim regardless of the overall cost or how much you initially paid.
So, which should you choose?
As specialist Medical Malpractice providers, we strongly recommend Contractual Indemnity coverage, as you get what you have actually paid for - coverage that protects you from claims made against you. This is why Servca only offers contractual Indemnity and never discretionary. Via contractual cover, your insurers will have to pay off any claim made within the agreed guidelines of your insurance policy, and you would only be required to pay for the policy itself.
Sure, there is always the chance you might never receive a claim, but is it worth the risk? Claims can be managed but they can’t be fully prevented from happening. The risk you take as a practitioner and the kind of policy you pick either reduces or increases how vulnerable you are to that risk.
No matter how good you are at your job, you should prepare for a worst-case scenario.
If you are unsure what kind of policy you have and are worried you may have accepted Discretionary cover over Contractual, our consultants can answer any questions you have about your policy. In addition, we offer a free silent review service where we will happily talk you through your policy and inform you of any risk exposures you may be partial too.
If you are interested in knowing more about our Silent Review service or how you can go about getting Contractual Indemnity, we are available via 0207-846-9010 and info@servca.com.
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