Dissecting the new state-backed indemnity scheme

Jeremy Hunt has announced a state-backed indemnity scheme which has caused huge disruption in the indemnity market – impacting providers and GPs. The team at MIAB have been analysing the changes to understand the implications in the short and long-term. MIAB’s MD Robert Lynch shares his thoughts on the announcement of the new state-backed indemnity scheme

The announcement of the new state-backed indemnity scheme has rocked the healthcare sector. Some GPs had long called for the introduction of a government indemnity scheme, similar to the Clinical Negligence Scheme for Trusts – which handles all clinical negligence claims against member NHS bodies – as an alternative to the increasingly expensive annual memberships of Medical Defence Organisations (MDOs).

However, it’s fair to say that few expected the government to create such a scheme. It’s a huge change to the status quo, a big challenge to the dominance of the MDOs and, in the scramble to find out more, it has left many clinicians and indemnity providers with more questions than answers.

Talking to GPs, practice managers and NHS staff at the Best Practice event, this is the hot topic of the moment. As Indemnity insurance experts, we’re getting lots of queries and requests for advice. It’s made us query the future state and shape of primary care indemnity and its implications now and in the future.

What might it all mean?

We believe the state scheme will only cover malpractice/clinical negligence. Issues such as GMC hearings and professional regulations, etc. may not be covered. It will cover GMS/PMS/APMS contracts and urgent care through NHS Standard Contracts. Private, non-NHS activity will still need indemnity cover.

Returning GPs to the frontline of primary care is an important objective of healthcare leaders and MIAB has been actively supporting this by offering indemnity solutions to clinicians with sanctions, facing disciplinary hearings or subject to complaints (whether proven or not). These are often refused cover by MDOs, blocking their path back to practice.

Naturally we have some questions; will the new scheme cater for clinicians in these situations? Will it offer due diligence on their circumstances to encourage them back to the front line?

Positions held

One issue that stands out is the position of the government once they become liable for malpractice/clinical negligence claims. Will they then change the law to insist, where possible, treatment is through the NHS rather than private – therefore reducing the compensation pay-outs? But what affect will this have on waiting lists and resources?

Similarly, will the government have more say over the calculation of the discount rate? This is used by the courts to calculate future loss in personal injury cases. A ‘better’ rate will mean lower pay-outs, which reduces the cost of the scheme. Is this fair for claimants and their families?

Not all is as it seems

One declaration made almost immediately after the state scheme announcement was from The MDU, who ‘slashed prices by 50%’. Whilst this may seem enticing, it’s important to realise this isn’t a reduction on existing cover, but the creation of a new product that is significantly cheaper than the existing.

The new product is based on the principal of ‘claims paid’ cover, which requires protection when the claim for the alleged malpractice is made, not when it occurred. This is opposite to ‘traditional’ MDO ‘claims occurring’ cover and requires an additional product called ‘run off’ cover. This protects a clinician for a set period of time after the policy has ended, or they stop practising, to ensure the financial burden of a claim does not pass back to them.

Most GPs may never have heard of run off cover as it is not required in their current MDO cover but it’s crucial they understand it and its implications. For example, making sure to check terms and conditions, for example, its length, very closely. Consider that negligence claims can be made many years after incident, so purchasing a suitable length of policy is vital. Claims for a minor can be made within three years of that minor turning 18 years old, so a period length of up to 21 years may be required.

A change in purpose

Considering the MDOs themselves, it’s important to query what will happen to them when the state scheme starts. What will be their purpose be when medical indemnity is no longer required from them? An educated guess is that they will shift their focus on to other indemnity covers, such as the GMC hearings and professional regulations. In this they will face tough competition from insurers who already provide products to cover these and are long established.

GPs also need to remember that the state scheme won’t be free – there will still be a cost, to be determined as part of contract negotiations as a practice, federation, MCP, or as a Primary Care Home. They will also have indemnity requirements and deliver a wide range of contracts, all of which should be included.

This article first appeared on MIAB’s website; you can view the original article here.

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