Claire Howarth – Account Director for Medical Professions at Aon – looks at the recent government consultation on clinical negligence indemnity and the benefits a regulated insurance solution offers doctors and consultants.
Following the Paterson Inquiry, the UK government ran a consultation on the provision of Appropriate Clinical Negligence Cover for healthcare professionals. The responses to this were published in December 2022, with the majority finding in favour of moving to regulated insurance products to indemnify practitioners’ private work which is not covered by Crown indemnity or CNST. This was also the government’s preferred option.
Importantly, for many private physicians and consultants, the consultation calls into question their current reliance on discretionary cover obtained from the medical defence organisations (MDOs).s. Doctors will need to review where they source their medical indemnity and potentially look elsewhere. The good news is the insurance market stands ready to deliver this protection – in fact the London insurance market has offered this type of protection in different guises for many decades.
Discretionary Concerns
For over 100 years, MDOs have provided discretionary indemnity for their members, so some may question why there is a need for change. The government’s consultation addresses concerns about the lack of guarantees offered by discretionary products; unlike the contractual certainty provided by insurance, with discretionary memberships the MDOs apply their discretion as to whether they will support a request for assistance (pay a claim) at the time an incident is notified. This results in uncertainty as to whether – and how much – the MDO will pay out, which may be a source of anxiety for doctors. It also potentially exposes both them and their patients to financial loss.
Large private healthcare providers are also keen to ensure the doctors they work with are appropriately indemnified and increasingly we are hearing them express reservations about the uncertainty of discretionary cover.
The government has also expressed concern that patients having private treatment do not have access to contractual redress should something go wrong. Motor insurance is a legal requirement to ensure that anyone injured receives the support and care they need. As with motor accidents, clinical negligence can leave people with long term health conditions and yet neither we as individuals nor the government would see discretionary car insurance as a viable solution.
Lack of Regulation
There is also concern in government regarding the lack of regulation in the MDO sector. Insurers must follow the Financial Conduct Authority’s (FCA) Principles, which is essentially a set of strict requirements for how they should conduct themselves – with integrity, due skill, care and diligence – as well as how they treat and communicate with customers. The MDOs have no equivalent body or guidelines in place for their discretionary cover.
One key requirement insurers have to meet is Financial Prudence where “a firm must maintain adequate financial resources”, in order to have enough money to pay claims. Again, no such solvency standards are applied to discretionary providers, despite the amount of money they manage on behalf of their members and the fact that their occurrence-based indemnity intends to pay claims long into the future (meaning it is difficult to calculate the value of future claims that are not yet reported in order to ensure cash reserves are sufficient).
More Clarity
Fortunately, there are indemnity solutions available from the insurance market; solutions which also offer additional benefits compared to discretionary cover from MDOs. These benefits are provided with the certainty of contractual cover– – where doctors are clearly informed about what is covered and what is excluded before they buy a policy. Effectively it is guaranteed protection, within the terms of the policy, providing the physician - and their patients - with greater certainty should a problem occur.
More Security
Buying a regulated product also brings more security. It means that medical indemnity insurance policies – such as the Medical Indemnity Insurance arranged exclusively by Aon – are regulated by the FCA) as well as the Prudential Regulation Authority (PRA); providing further reassurance and peace of mind that the policy will be there to respond in the event of a claim. Additionally, these insurance products also offer the option of redress to the Financial Services Ombudsman.
Time to Think Ahead
With change in the indemnity market on the horizon, doctors, surgeons and consultants undertaking private work would be wise to think ahead about how new legislation could impact them and how they can best protect themselves and their patients. Turning to the insurance market for comprehensive indemnity cover is a long term, secure alternative.
For More Information
Aon offers medical indemnity insurance for privately practising physicians. The policy we offer has been tailored by healthcare specialists at Aon and is available exclusively through us. Please get in touch if you would like to discuss how Aon can help meet your indemnity insurance needs by emailing Claire at [email protected]
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Aon plc (NYSE: AON) exists to shape decisions for the better — to protect and enrich the lives of people around the world. Our colleagues provide our clients in over 120 countries and sovereignties with advice and solutions that give them the clarity and confidence to make better decisions to protect and grow their business.
Whilst care has been taken in the production of this article and the information contained within it has been obtained from sources that Aon UK Limited believes to be reliable, Aon UK Limited does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the article or any part of it and can accept no liability for any loss incurred in any way whatsoever by any person who may rely on it. In any case any recipient shall be entirely responsible for the use to which it puts this article.
This article has been compiled using information available to us up to 15/06/2023.
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