Opening the medical indemnity market to more insurance companies – similar to a move by the legal profession in 2000 – could drastically reduce the amount GPs must pay for essential legal cover, brokerage firm Lockton told GPonline.
The company – which is behind an insurance package that has helped out-of-hours provider Vocare attract more GPs by cutting indemnity costs – said insurance companies could offer protection for half the price of the existing model, in which medical defence organisations (MDOs) provide cover.
MDOs said the claims were 'spurious', and warned that GPs could be forced to continue paying premiums for years after retirement to maintain cover – or risk being left vulnerable to claims without any protection.
Dr Nick Clements, head of underwriting policy at Medical Protection, said the comparison between insurance cover and MDO protection was like 'comparing apples with pears'.
GP indemnity costs
But soaring indemnity costs are a growing part of the crisis facing general practice. A GPonline poll of the profession last year revealed that one in three GPs are paying over 20% more now than they were five years ago to maintain legal cover, with one in 10 paying over £10,000 a year.
GP out-of-hours care has been particularly hard hit, with as many as four in five GPs being forced to cut back on shifts as a direct result of indemnity costs. Earlier this year, a special LMCs conference to debate the GP crisis called on the GPC to negotiate crown indemnity cover for all aspects of GP work – similar to the system for insuring hospital doctors.
Cover provided by insurance companies and MDOs work differently. MDO cover affords GPs lifelong protection from any claims made against them, as long as they had MDO protection during the time the event that gave rise to the claim took place – even if claims are filed after they have stopped practising and paying for indemnity.
Insurance companies operate on a ‘claims made’ basis, which means that responsibility for paying a claim lies with the insurer during the same year a claim is made, regardless of when the incident took place.
This difference means that – even after retiring or leaving the profession – GPs would have to continue paying for ‘run-off cover’ from an insurer to maintain legal protection should any complaints against them come to light after they have finished practising.
Clinical negligence claims
Dr Christine Tomkins, chief executive of the Medical Defence Union (MDU) said clinical negligence was a 'long tail' business, meaning claims are often made against GPs years or decades after the event in dispute.
GPs buying indemnity from insurers would therefore be forced to continue paying for cover for years after they cease practice or retire to maintain cover.
But Lockton partner Kevin Culliney said this issue could be skirted by having insurance companies provide cover only for collective entities of GPs, such as a whole practice or federation rather than individual GPs.
This would mean that, so long as the practice or federation continues to buy indemnity, the GPs would remain protected even after ceasing practice themselves – negating any need to pay life-long personal run-off fees.
Alternatively, he suggested that NHS England could negotiate minimum terms for a run-off period lasting three to six years, similar to the system set up for solicitors in 2000.
This saw solicitors’ premiums drop by an average of 40%, and costs have since remained lower than they were before this shift over the interim 16 years, he said.
He suggested that this would cover most claims made against GPs after they retire. In addition, a fund could be created to cover GPs from claims made after their three to six year run-off period, or if the entity they were protected with also ceases to exist.
Because such claims will be ‘relatively few’, this could be funded by charging all GPs just £100 a year, he said, allowing it to quickly grow to cover these outlier claims. NHS England could also underwrite these outlier claims, he suggested.
He said: ‘Any claims brought after this time, i.e. more than three years after retirement, could be met by a fund, part-funded by GPs paying, say, £100 a year each and part by NHS England. The effect of this would be dramatic. By current estimates, many insurers would enter the market and the cost of indemnity would likely halve.’
But MDOs said claims often took much longer than three to six years to come to light, and this deal would provide GPs 'inadequate' protection.
Dr Tomkins, from the MDU, said: ‘In one instance we even saw a claim being made 40 years after the incident. In cases involving children, claims can be made until three years after they turn 18 and very often costly claims are notified many years later. For example, a missed meningitis case where a patient has brain damage can take considerable time to assess the true extent of the damage and for a claim to be brought. These claims usually cost millions of pounds.
‘Although insurance company premiums are currently lower than MDO subscriptions, we would expect to see insurance premiums rise in approximately three to five years when they start to pay out claims and need to ensure that funds are available.'
Dr Clements, from Medical Protection, said: ‘The comparison between this proposal and our protection is spurious. It’s like comparing apples with pears.
‘Any insurance-based proposal would attract insurance premium tax, adding 9.5% on to the costs at a stroke. Significant excesses are also contained in some commercial insurance policies; whereas Medical Protection can provide assistance with the smallest of claims free from additional costs.
‘We always welcome competition, but only by challenging and reducing the cost of risk will we see the cost of protection for GPs go down, which is why we campaign heavily on this point.'
Both Medical Protection and the MDU highlighted the experience they had developed through offering medical indemnity for more than 100 years, and highlighted their status as not-for-profit membership organisations, with teams of experienced doctors offering medico-legal support.