Traditional indemnity cover may be past its sell-by date

Specialist medical accountant Ray Stanbridge, of Stanbridge Associates, said the traditional discretion system in the private medical sector had, on balance, served doctors and consultants well.

But in recent years increased claims had put pressure on premiums and also on the balance sheet strengths of providers.

He told Independent Practitioner Today: ‘The market has adapted and there has been an increase in the number of Lloyds’-based products being offered by providers to compete with discretionary organisations. Often these are at competitive prices, though some say these new providers cherry-pick.

‘There is much that is positive in the consultative document in the environment of rising indemnity insurance claims. But the risks that new products may be subject to insurance purchase premium tax (currently 12%) could, however, be a dampener.’

Mr Stanbridge believed the Government should also look at alternative concepts of a ‘no fault’ indemnity insurance claim scheme, as found in New Zealand.

He added: ‘This may be anathema to some aggressive lawyers who push claims, but is certainly worth giving deep consideration to as an alternative.’

‘Another missed opportunity’

MDDUS chief executive Chris Kenny was quick to criticise the consultation, calling it ‘yet another missed opportunity to tackle the real issues that drive rising costs for healthcare professionals’.

He said: ‘Instead of supporting choice and proposing concrete actions on legal reform that would make a real difference, the Government is seeking to impose a cost increase on health professionals by moving to an insurance-based model that will attract a 12% insurance premium tax.

‘Patients will not be better protected – the document acknowledges that there is no evidence of harm in the UK from the current discretionary model. Doctors and dentists will gain no benefit. The only winner is the Treasury with its additional 12% premium tax income.

‘In short, there is little evidence to support the proposals, nor indeed that there is a real problem to be resolved other than increasing competition and transparency.

‘There does need to be consistent financial data from all participants in the market and there’s a case for access to the Financial Ombudsman in the event of disputes. These disproportionate proposals totally miss these opportunities to make a real difference quickly.

‘We can, at least, welcome the fact that Government is consulting properly on this issue in a way that it has not done elsewhere. We therefore urge clinicians, their representative bodies and the devolved administrations to follow MDDUS’s lead and respond strongly to Government to urge them to focus on where change is really needed.’

A seismic shift in cover?

Roger Houston, of Medical Risk Services Limited, said: ‘The DHSC has identified fundamental weaknesses in the current system of discretionary cover. It highlights contractual uncertainty for policyholders, serious question-marks over medical defence organisations’ reserves, lack of clarity on their financial strength and an absence of regulatory scrutiny.

‘Shining this spotlight on the glaring inadequacies of the current system sounds the death knell for non-commercial provision of clinical negligence cover.

‘Although this consultation runs until the end of February, the DHSC’s comments indicate a seismic shift in how doctors and dentists source their clinical negligence cover. Waiting simply isn’t an option for practitioners – it’s essential they consider immediately how this will impact them and for them to look at alternative options.’

MPS – ‘Already exploring insurance’

Simon Kayll, chief executive at MPS, said: ‘We are working with the Government on their proposal to regulate professional indemnity, contributing our knowledge and experience to ensure that members’ needs remain at the forefront of any decisions made.

‘We are already exploring the best way to offer members an insurance product. So, should the Government decide all doctors and dentists need to hold a regulated policy of insurance for clinical negligence risks, we are confident we will be in a strong position to offer this as a benefit of membership to UK members.

‘Any proposals to introduce regulation will be subject to public consultation and require legislation, so it will be some time before the details are agreed and any changes implemented. In the meantime, it is business as usual at MPS.’