What is Medical Indemnity & Who need's it?

The GMC states; “A doctor must have adequate and appropriate insurance or indemnity in place when they start to practise medicine in the UK” – which begs the question, what is Medical Indemnity?

Medical Indemnity policies protect individual practitioners and medical entities for acts of medical negligence, accidents and incidents that result in (proven) bodily injury and or mental anguish of any given patient as a result of professional medical services provided.

Medical Malpractice compensatory costs can often be large, rising to millions of pounds in certain cases. Whilst compensatory values (paid to claimants) contribute to the claims value, an often overlooked element is the defence (legal) costs that are incurred in defending practitioners and medical entities. Even when a claim or allegation has been successfully defended (and no compensatory claim amount is paid), the legal costs can easily build up to a substantial amount.

What types of indemnity are available?

There are two types of Medical Indemnity available:

• Medical Defence Organisation (MDO) memberships.
• Private Insurance/Indemnity policies.

What are the differences?

MDO memberships.

• MDOs are discretionary membership services. Claims are settled from an accumulative “pot” of premiums that are collected from all their members on a yearly basis.
• MDOs are discretionary organisations – they are within their rights to decline to pay claims or offer legal representation at their own discretion. The relevant individual/entity may be left responsible for claims and legal representation costs.
• MDOs are not regulated organisations.
• MDOs offer claims occurring policies – a policy covering claims that arise during the policy period regardless of when the claims are made.
• No limit of indemnity – if a claim is accepted, the MDO will pay for the total claim value without a limit/cap to costs.
• MDOs typically use internal legal teams to represent members.

Private Insurance/Indemnity

• Private Medical Indemnity is offered by commercial insurers (typically within Lloyd’s of London). The terms that are offered, are contract certain and follow a strict adherence to the policy wordings (the contract) that are provided with the policy schedule.
• Each policy has a set limit of indemnity – claims are paid up to the total value of the limit of indemnity offered. (Limits can be aggregated over a year or per individual claim).
• Private Insurers offer claims-made policies - a policy that is triggered when a claim is made during the policy period regardless of when the wrongful act that gave rise to the claim took place. (The one exception is when a retroactive date is applicable to a claims- made policy).
• Regulated by the Financial Conduct Authority (FCA).
• Lawyers instructed by Lloyd’s of London insurers are typically the top 10 in the UK - examples include Brown Jacobson, Capsticks, DAC Beachcroft and Kennedys Law.

Summary

There are pros and cons for both options with many variables that need to be considered by the "policyholder" (individuals or group entities).

In certain situations, whereby an MDO declines membership, respective practitioners are forced to follow the route of private Medical Indemnity. Unfortunately, a declinature by an MDO labels the practitioner as being "distressed" and as such, premiums may be proportionally inflated (depending on the circumstances of declinature by the MDO). In these scenarios, it is the role of an insurance broker to negotiate and structure a policy for the practitioner in question.

If a Practitioner converts to Private Medical Indemnity through their own choice (and notas a result of a declinature/previous claims), the Practitioner's chosen broker may be able to negotiate a premium that is cost-effective in comparison to the MDOs premiums.

Whichever of the two routes a Practitioner chooses to follow, it is worth understanding the differences between the types of cover - one may be more beneficial than the other for certain individuals.

For more information and free consultations on Medical Indemnity, please get in contact with me.

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