CREDIT: This story was first seen in OnMedica
One of the UK’s leading medical defence organisations today announced a price freeze on the cost of indemnity for GPs until at least 2018, OnMedica reports.
MDDUS agreed the move after the Lord Chancellor announced plans to change the personal injury discount rate is calculated in England and Wales.
The rate, the notional return to be expected from investing a lump sum award, is used in calculating payouts for injury, including those for clinical negligence. It is intended to provide full compensation, neither more nor less. It was cut last February from 2.5%, set in June 2001, to −0.75%, causing the NHS compensation bill to soar.
Currently, the discount rate is set on the basis that injury victims will adopt a “very low risk” approach to investing through index linked gilts (government bonds). The new approach will assume investment in a low risk diversified portfolio instead, which should produce a higher return.
A draft clause to be added to the Damages Act 1996 states that the Lord Chancellor will set the rate, advised by an expert committee, and review it every three years.
Making the announcement last week, Lord Chancellor David Lidington said that he would expect that if a single rate were set today under the new approach the real rate might fall within the range of 0% to 1%.
The MDDUS now has 40,000 active members, making it the UK’s second largest indemnifier of GPs, with two thirds of them practising outside of Scotland.
MDDUS chief executive Chris Kenny pledged to freeze subscription rates for GPs until at least the middle of 2018.
He said: “We know that GPs have been understandably worried about rising indemnity costs and the impact they are having on both their own financial position and the future of many in the profession.
“We have fought hard to overturn the short-sighted decision taken in February and welcome the Lord Chancellor’s announcement. Our members have always welcomed our agility, professionalism and value and I’m pleased to say we can now reinforce the already substantial financial security we offer too.”
He added: “Government made a profound misstep in reducing the rate so dramatically in February, but it is to its credit that it has responded promptly to our concerns, coming up with a scheme that is fair to claimants and defendants alike and gives the market greater certainty.
“We had warned our members that there may have to be further rises in the cost of indemnity during the next few months but I’m delighted to say that will not now be the case.”