The government says its preferred option is to replace existing 'discretionary indemnity arrangements' with regulated cover - and that 'there could be higher overall costs of clinical negligence cover' under the new system.
GPs in Scotland and Northern Ireland - where there are no plans as yet to introduce state-backed indemnity in line with England and Wales from April 2018 - could be hit hardest by any rise in costs.
However, GPs in England and Wales could also face increased costs for cover to carry out non-NHS work. The consultation document also warns that the transition to regulated cover could trigger further disruption because 'current providers may be unable to, or choose not to, continue to provide cover'.
State-backed indemnity
Plans to regulate indemnity come just days after the government in England confirmed that it planned to fund the much-anticipated state-backed indemnity package due to take effect next year from 'existing resources allocated for general practice'. LMCs last month expressed their 'outrage' at the move.
A regulated model could drive up costs, the consultation warns, because 'as providers of discretionary clinical negligence indemnity would have to comply with regulation in order to continue to sell clinical negligence cover to regulated healthcare professionals, this could be reflected in an overall higher cost of cover for the professional'.
The case made by the government for switching to a regulated model is that under the current discretionary system 'unlike commercial insurance companies, they have no contractual obligation to meet the cost of any claim against the professionals they cover', and 'no legal obligation to ensure they have the reserves to cover the cost of claims'.
The government also argues that a requirement for indemnity providers to disclose their full financial provision would provide more clarity for health professionals about the extent of their cover and offer them greater guarantees on financial conduct and fair treatment.
Legislation
The consultation document says the government hopes to 'change legislation to ensure that all regulated healthcare professionals in the UK not covered by a state-backed indemnity scheme hold appropriate clinical negligence cover that is subject to appropriate supervision, in the case of UK insurers, by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA)'.
MDDUS chief executive Chris Kenny said there was 'little evidence to support the proposals', warning: 'This consultation is yet another missed opportunity to tackle the real issues that drive rising costs for healthcare professionals.'
He added: '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.'
MPS chief executive Simon Kayll said: 'We are working with the government on their proposal to regulate professional indemnity.
'We are already exploring the best way to offer members an insurance product. 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.'
