Renewing indemnity insurance used to be simply a question of writing the cheque. However the significant rise in premiums in recent years has forced a rethink. The two most significant changes are the likely introduction of a government-backed GP indemnity scheme - pencilled in for next year - and the reappearance of claims-made policies after many years' absence.
Claims-made policies are cheaper in the early years than the alternative occurrence-based policies because they only insure against claims received during the period of the policy. Any claims received after the term of the policy would be uninsured without the purchase of separate ‘run-off cover' - unless the government decides to assume responsibility for historic claims as part of the new indemnity scheme.
Much has been written about whether claims-made policies are truly cheaper in the long run, but there has been less comment on the legal implications of the choice. These will differ depending on your role:
GP partners/contract holders
- GP partnership agreements often include an obligation to stay insured using an occurrence-based policy. If a partner were to take out a claims-made policy without the consent of their other partners, they would be in breach of the agreement. This would likely be grounds for expulsion.
- If there is no partnership agreement in place or it is silent on the issue, the question becomes one of good faith. If - as is likely - all the partners had previously been on occurrence-based policies, then it is arguable that a partner should as a minimum notify their other partners before changing to a claims-made policy.
- The standard GMS contract requires contract holders to maintain ‘adequate’ indemnity insurance, and the standard PMS contract mandates ‘appropriate’ insurance. Both contracts therefore appear to permit claims-made policies, but it is likely that contractual issues would arise if run-off cover was not purchased.
- The BMA model contract for salaried GPs states that ‘the practitioner will maintain full registration with the GMC and membership on an occurrence-based basis’. Since all GMS practices, and many PMS practices, are required to engage their salaried GPs on employment contracts that are no less favourable than the BMA model terms, it is likely that most salaried GP contracts will include this reference to an occurrence policy.
- If a salaried GP moves to a claims-made indemnity policy, they may well be breaching the terms of their employment contract.
- Locum contracts are many and varied so it is not possible to make generic statements, but it is certainly important to read and understand the section on indemnity insurance. If a practice requires its locums to hold occurrence insurance, don’t take the job if you only hold claims-made.
Do claims-made policies carry more risk?
The principal risk is that a GP with claims-made insurance may fail to purchase adequate run-off cover. Once a partner, employee or locum has left the practice, it becomes very difficult to monitor what they do. Claimants typically lodge their claims against multiple parties, often including one or more named doctors; the GP partnership as a whole; the hospital trust, etc.
The idea is to involve as many parties as possible, in the hope that something sticks and they find some ‘deep pockets’. If one of the parties to a successful large claim is uninsured, the likelihood is that they will not be able to afford their share which may then well fall to the others to pay.
What should GPs do?
There is nothing inherently wrong with claims-made policies and they are common in other professions, but GPs should be aware of the particular challenges they present in the medical profession. As a minimum you should understand the contractual obligations you may be under, and you would generally be well advised to obtain written agreement from your partners or employer before taking out a claims-made policy.
If you already have a claims-made policy and are considering moving practice, you should discuss this with them as they may well require you to buy the requisite run-off cover before you join.
- Daphne Robertson is the founder and senior partner of DR Solicitors and an expert on NHS partnership and regulatory law.