MDU consultant indemnity comparison 1 How the new indemnity schemes for consultants compare with MDU benefits Guide. Support. Defend.
2 MDU consultant indemnity comparison Contents 03 The fundamental difference 05 The impact of claims-made cover 06 Why new claimsmade schemes can be cheaper at the start 07 The difference a not-for-profit company makes 08 MDU membership offers the best defence available 09 Some common questions about indemnity 10 Longevity and experience count 11 MDU membership at a glance
MDU consultant indemnity comparison 3 1. The fundamental difference Comparing the new cheap-priced professional indemnity schemes to MDU membership is like comparing apples to pears the benefits are fundamentally different. MDU benefits are all occurrence based. The new schemes are claimsmade. This is a crucial difference. New claims-made schemes may offer a cheap low start premium in the short run, but this needs to be weighed against the long term benefits of MDU membership. OCCURRENCE MDU membership is provided on an occurrence basis. This means that you pay an annual subscription to access indemnity for the work you do during your membership year. You can then ask for help with a complaint or claim arising from that work whenever it comes in, even if this is years later or after retirement (even extending after death). In effect, you have support for the rest of your life for incidents arising from each year of membership. CLAIMS-MADE The different type of indemnity provided by the new entrant providers is claims-made which means that the annual premium indemnifies new claims notified during the period of insurance only. Doctors choosing these schemes are just buying cover up until the end of their policy year. WHY IS THIS IMPORTANT? Claims for medical negligence are usually made months or years after an adverse incident has occurred. A patient has three years from their date of knowledge that they
4 MDU consultant indemnity comparison have been harmed to make their claim. For children this can extend up to their 21st birthday, while there is no limit to when someone with mental incapacity can make a claim. As the graph below shows (based on MDU historical data), typically around 40% of claims come in more than two years after the incident and around 10% more than five years later. The MDU has experience of claims being made more than 40 years after the treatment causing the claim. Buying claims-made cover only gives indemnity for the year a doctor holds the policy. In order to ensure they are covered under a claims-made scheme they need to continue to renew their policy for many years after, or alternatively, purchase run off cover. As an MDU member you have the peace of mind of knowing that as long as you were a member at the time of an incident, you can report a claim at any point thereafter, at no additional expense.
MDU consultant indemnity comparison 5 2. The impact of claims-made cover 1. It costs a doctor to leave a claims-made scheme before retirement ( run-off cover) If a doctor wishes to leave one of the new claims-made schemes, he or she will need to make sure that they have ongoing cover for claims notified in the future, relating to work undertaken during the insured period. This run-off cover can be expensive at the best of times (which will cost more than a single annual premium), but if an individual is unlucky enough to have incurred a claim whilst in a claims-made scheme then the price of buying run-off insurance may be even higher. We have been approached by doctors wanting to return to the MDU from the new claims-made schemes feeling locked in by the penalty of having to buy run-off cover to prevent a gap in cover. 2. What if the provider leaves the market? You should consider the scenario not only of where a doctor wants to leave one of the new providers, but also where the doctor is forced to do so because the new indemnity organisation decides not to renew cover (perhaps because of a claim) or to cease offering cover altogether. This was the situation when the St Paul Insurance company left the UK medical indemnity market in 2001. At that time a large number of GPs and dentists were forced to pay for run-off indemnity. 3. The long-term pricing risk moves from the indemnifier to the doctor Claims-made schemes offer only a price for one year s cover. Doctors, potentially trapped in the schemes because of the large run-off payment to leave, are therefore at the mercy of whatever future price rises the scheme chooses to charge. MDU members pay a subscription for a year and can relax knowing they need never pay again to report anything arising from that year.
6 3. MDU consultant indemnity comparison Why new claims-made schemes can be cheaper at the start At this time when private practice income is increasingly harder to earn and your costs are going up, it is tempting to seek savings offered on an indemnity subscription. These are likely to be short-lived with a claims-made scheme. 1. Claims are unlikely to be reported in the first couple of years A claims-made product can be cheaper at first if it fails to pick up incidents occurring from all your past years of practice. It is unlikely a claim will be notified, let alone paid out, in the first or second year of the scheme. Only around a third of claims are reported in the first year and it will take on average a couple more years before a claim is settled. Even by the second year only around half of claims arising from the first year will be notified. The insurer is therefore able to charge a low price for indemnity in the first couple of years as it is unlikely they will have to pay for any claims. 3. Claims-made insurance premiums do not stay low forever. Ultimately claims costs in the long run are the same under both mature occurrence and claims-made arrangements. The difference is in the way a doctor s payments are spread. Payments start low and finish high for claims-made, rather than being consistent for occurrence benefits. We would therefore expect prices for claimsmade cover to rise significantly after the first few years until ultimately they are similar to those of the MDU annually but, in addition, they require a run-off payment if you leave. 2. Are the subscriptions for new claims-made schemes low enough? Discounts may seem too good to turn down. However, based on the claims reporting profile shown on page 4 they could be even greater.
MDU consultant indemnity comparison 7 4. The difference a not-for-profit company makes The MDU is a mutual, not-for-profit organisation. We are run by doctors for doctors. We are owned by you and your subscriptions are used to look after your interests now and in the future. How does this differ from the new schemes? 1. There is no middle-man with the MDU Unlike the new schemes, we do not pay a middle-man a fee or commission to set up insurance. 2. No commission We do not have salespeople paid on commission. 3. Advice is provided by our own expert doctors and lawyers We do not outsource the provision of medico-legal advice to an outside company looking to make its own profit. 4. Our ethos is to be on your side and by your side The sole purpose of the MDU is to guide, support and defend doctors. As a member said at one of our recent Roadshows: It is so good to know the MDU is on our side when everybody else seems to be against us. We do not settle claims for expediency s sake. We know how important your reputation is to you and will only settle a claim with your consent. 5. We are not in business to make a profit The majority of the subscription we collect from members goes to pay claims and the legal costs of defending and assisting members. None is allocated to dividends. Only 7.5% of subscriptions goes to the administration and management of the MDU.
8 5. MDU membership offers the best defence available MDU consultant indemnity comparison MDU membership provides the best guidance, support and defence available. 1. Benefits are unlimited in both time and amount Unlike claims-made schemes which have an indemnity and sometimes also a legal expenses limit, the MDU does not place a limit on the amount of indemnity we can provide either before or after retirement. If you retire from, or leave, full membership of the MDU you can still request MDU assistance with claims arising from an incident which happened in your period of membership, even if the resulting claim is pursued ten or more years later, which is not uncommon. The new schemes from at least one of the new providers only covers claims notified within a limited number of years after retirement or death. This applies also in the case of unforeseen early retirement due to accident or illness. Even if a new indemnifier is able to offer post-retirement cover with no end-date you should be aware that it will have a limit on the amount of indemnity which will be provided. This means if you happen to have a large claim reported and settled soon after you retire, there may be no indemnity left to cover a subsequent claim. 2. MDU s advisory service offers unsurpassed expertise and guidance Over 30,000 members called our advisory service last year and received expert advice from doctors who have had experience in practice and know the issues you face. 3. Support with patient and GMC complaints We do not place a financial limit on defending your reputation, whether it is in connection with disciplinary, civil or criminal proceedings. The MDU s team of in-house solicitors has unrivalled experience of supporting our members at GMC hearings and, what is more, has a success rate when convincing the GMC not to refer complaints on to a fitness to practise hearing that was better than 90% in 2011. By contrast, one of the new indemnifiers issues a policy which states that it will only handle disciplinary, civil and criminal proceedings where there is more than a 50% chance of success. The policy does not make clear who will decide what the chance of success is. Do you want to be in the position of having no defence at all when facing a GMC, criminal or civil case because someone has decided you might not win? 4. Robust defence with negligence claims Our expertise allows us to robustly and successfully defend over 70% of claims (based on our results between 2001 and 2011).
MDU consultant indemnity comparison 9 6. Some common questions about indemnity Does the MDU allow good doctors to subsidise poor performing ones? No. We have rigorous procedures for vetting new applications for membership to ensure we are not allowing doctors with poor claims records into membership. We also have procedures for monitoring the risks posed by existing members and addressing these in the interests of the membership as a whole. Will individual underwriting mean new indemnifiers will get better claims experience than the MDU? It is wrong to think that individual underwriting can accurately predict who will or will not have claims in future. In 2010 the MDU had 80 consultant members who made their first claim after 20 years claims-free membership and in 2011 there were another 92 first-time claimers after 20 years membership. Our experience is that large claims (which are the main driver of subscription cost) occur randomly. A review of 300 recent large claims handled by the MDU showed all but seven were from members who had never previously reported a large claim. What are the potential downsides of individual underwriting? Individual underwriting can seem attractive at the outset, but if you are with a new claimsmade indemnifier, how will their insurer deal with you if you report a claim will this quickly be taken into account in your premium? Claims can, and do, happen to anyone at any time. Is there a risk in joining a scheme which gives bigger discounts for practising at a particular hospital? A doctor would need to be able to demonstrate they were not breaching GMC guidelines on financial and commercial dealings which indicate that you must not ask for or accept any inducement, gift or hospitality which may affect or be seen to affect the way you prescribe for, treat or refer patients.
10 7. MDU consultant indemnity comparison Longevity and experience count We have been serving members for over 127 years the quality of our support has been validated over successive generations. When medical negligence claims and disciplinary matters can stretch out over many years, it is important to know an organisation will be there. Don t just take our word for it though. This is what some of our members say. The case took two years to resolve and I was completely exonerated by the GMC, to my huge relief. Throughout, the service from the MDU was superb. Not just in processing my case, but supporting me psychologically and emotionally. I had the need to call the MDU for advice at about 3am. I was put in contact with Dr... who could not have been more helpful, supportive and clear. The advice she gave was both practical and unambiguous and exactly what I needed during a difficult problem. This one consultation alone has justified my MDU membership. Five years ago, out of the blue, I was shocked to receive a claim for an incident that happened 40 years before. I couldn t recall the patient, and there were very few records how could I possibly defend it? The MDU put together a strong case which showed that I had followed accepted procedure at the time and there was no liability on my part. It was a terribly stressful time and preoccupied my every waking moment.
MDU consultant indemnity comparison 11 8. MDU membership at a glance MDU MEMBERSHIP Your MDU a mutual, not-for-profit organisation Run by doctors for the benefit of doctors Occurrence based indemnity for life No need for run-off cover Advice from our own team of expert doctors and lawyers No middle-man No commission paid 127 years of experience of helping doctors Proven successful track record Unlimited benefits in time and amount No financial limit with patient and GMC complaints
12 MDU consultant indemnity comparison How to contact us Membership t 0800 716 376 e membership@ Advisory t 0800 716 646 e advisory@ Your feedback Give us your feedback about the MDU /feedback Website @the_mdu Have you got our app? 2013 CON205-1303 MDU consultant indemnity comparison MDU Services Limited (MDUSL) is authorised and regulated by the Financial Services Authority for insurance mediation activities only. MDUSL is an agent for The Medical Defence Union Limited (MDU). MDU is not an insurance company. The benefits of MDU membership are all discretionary and are subject to the Memorandum and Articles of Association. MDU Services Limited, registered in England 3957086. Registered Office: 230 Blackfriars Road, London SE1 8PJ