As a doctor practicing in Private Practice, it’s a legal requirement to have Medical Indemnity Insurance cover regardless of specialisation.
Most doctors enroll in their first and often only insurance relationship with one Insurance Company, referred to in the industry as a Medical Defense Organisation or MDO. The relationship usually commences during a doctor’s medical training. Most of the MDO insurers offer early entry incentives such as low or no cost premiums initially knowing that doctor stickiness is high, meaning that doctors do not easily swop insurers. In simple terms how often do you review your home and content, or auto insurance? From our experience it’s not very often, and unfortunately the same applies to Medical Indemnity Insurance. Doctors don’t have the time or interest to review different policy wordings ad nauseum when it comes to switching medical indemnity insurers each year. To add to this the legal jargon makes it difficult to compare apples with apples as such and as each insurer continues to make amendments each year this adds another layer of comparative confusion, so doctors just stay with their existing insurer.
Insurance literacy is another challenge that we face on a regular basis. MDOs expect doctors to educate themselves on the ins and outs of insurance jargon and doctors are often not quite up to speed on the workings of their medical indemnity insurance and are not overt in expressing this lack of knowledge.
Some common misconceptions that we help doctors to understand:
CLAIMS MADE BASIS
Medical Indemnity insurance policies operate on a Claims Made and Notified basis.
This terminology simply means that when a doctor in question is required to notify their current insurer during the current period of insurance of a claim or circumstance that could give rise to a claim for a treatment, procedure, advice, comment that has aggrieved a patient; the notification of potential claim is current, i.e. the claim is being made now by the patient against the doctor, therefore ‘Claims made basis’, and another reason for a doctor to have current insurance in place. In other words, as a doctor you must have a current policy in force at the time the Claim is made against you.
A common misconception is that insurance paid in the year a procedure hypothetically etc. was performed will cover this potential claim – not so. For example If a doctor performs a procedure on a patient in February 2016 and the patient files a claim in May 2020, this is when the claim is made as it only becomes known to the doctor at this point in time, therefore the term 'Claims made basis'
The retroactive date (covered below) becomes relevant too. the first thing the insurer will do is confirm when the retroactive date of the doctor commenced. If it was after Feb 2016, the insurer will not honour the claim. Unlimited retroactive cover is however available through some insurers.
RETROACTIVE OR TAIL COVER
A Claims made insurance Policy, covers you for Professional Negligence arising from your medical services provided in the past. Cover is only provided for any Claim made against you during the Period of Insurance arising from any act, error or omission that occurs on or after the Retroactive Date.
The longer a doctor has been in practice the greater his or her risk that a claim could be made against that doctor. This is partly one of the reasons why a 50-year-old doctor with much experience pays a higher insurance premium than a 30-year-old doctor performing the same type of work. We are often asked by irate older doctors why their premiums rise each year. An important question a doctor should ask their insurer when switching is what their retroactive date actually is. This is important when a claim can be made on a current Policy for a Past Medical Service. This is another reason why doctors stay with their existing insurers out of fear of loss of retroactive cover.
ROCS – RUN OFF COVER SCHEME
Doctors contribute each year to a Run Off Cover Scheme which is a fund set up to fund retired doctors in the event an historic event with a patient arises as a claim, but the functioning of ROCS is also poorly understood. In simple terms ROCS operates as follows: If you as a doctor are under 65 years of age, after three years of not engaging in private medical practice you will becomes eligible for ROCS and are no longer charged for run-off cover by your insurer, that is, in the interim three year period, insurers can charge a nominal amount for run-off cover offered to doctors who permanently retire from private medical practice under the age of 65. Doctors over 65 automatically become eligible for ROCS.
Exceptions are doctors who leave Australia after working as a medical practitioner, doctors on maternity leave and deceased doctors whose estates are eligible for ROCS.
Understanding the terminology of your medical indemnity insurance is a paramount to ensure you are correctly covered and at the right price relative to your practice. When last did you give your medical indemnity insurance a health check?
About the author: Mark Freidin is an authorised representative and specialises in Medical indemnity Insurance, Practice + Day Surgery and Cyber Liability Insurance. He can be reached HERE
Photo Credit: Image by mohamed Hassan from Pixabay
Please note: This article is general in nature and is not comprehensive or constitutes legal or medical advice. You should seek legal, medical or other professional advice before relying on any content, and practice proper clinical decision making with regard to individual circumstances. Persons implementing any recommendations contained in this publication must exercise their own independent skill or judgment or seek appropriate professional advice relevant to their own particular practice. Compliance with any recommendations will not in any way guarantee discharge of the duty of care owed to patients and others coming into contact with the health professional or practice. Profcover Pty Ltd T/A Profmed is not responsible to you or anyone else for any loss suffered in connection with the use of this information.