HPPB Blog

Claims Made insurance cover v Losses Occurring: What’s all the fuss about?

At MRSL Enterprise we believe that in most cases losses occurring cover and overlong reporting
periods are a mechanism for insurers to charge doctors higher premiums for over specified cover.


If there is anything to be said for a bad doctor being able to bury his mistakes, where’s the need for
insurance cover at all...


We are all consumers of healthcare services in one form or another and the deeply held public trust
in medicine is entirely appropriate. Yet, we all recognise healthcare professionals are human as well
and will inevitably make mistakes.


Medicine is probably the most closely regulated of the professions (we cannot think of a more
regulated one). Typically, the regulator is a creature of statute. In the UK medical professionals are
considered public property, with performance data being increasingly available, from which a largely
unqualified public are able to make better informed decisions.


In recent years, several high-profile investigations have reached back decades to re-examine
neonatal deaths and individual doctors’ patient mortality rates, as just two examples. No reasonable
person would dispute that patients, relatives and the wider public are entitled to answers. However,
the doctors and others involved are entitled to appropriate protection and so the basis of insurance
cover is highly relevant.


So, with public and private medicine becoming ever more scrutinised and perfection being expected
as standard, how does the medical professional sleep at night, never mind adjourn into well-earned
retirement?

Medical Indemnity – the options to consider

We are sure you are aware that membership of a Medical Defence Organisation only affords
discretionary membership assistance. As a medical professional, if you want a group of fellow medics
to sit in judgment on whether you receive assistance with a claim at your moment of need (never
mind if the claim is valid or not), please do not trouble to read any further into this article.


At MRSL Enterprise we strongly recommend commercial insurance. Your interests are best served by
having a contract that is independently regulated by a body outside the medical profession (the
Financial Conduct Authority) and the contract is not discretionary (that is the insurers are obliged to
honour the contract and the regulator oversees the financial strength of insurers to ensure that they
can pay as required).


Within commercial insurance, you then have two options: Losses Occurring or Claims Made.


Losses Occurring vs Claims Made – without the jargon


Of course you want to minimise the risk of your individual medical practice producing unwelcome
surprises in the form of claims long after treatment has ended; what the industry calls Latent Claims.


The difference between Losses Occurring and Claims Made insurance is subtle and yet important.
Thumbnail definitions are:

  • Losses Occurring cover indemnifies for claims arising during the currency of the policy,
    regardless of the date of the claim events,
  • Claims Made cover operates for claims submitted during the currency of the policy from
    events that happened during the cover period. Those new to Claims Made cover, extend the
    cover back pre- inception by a retroactive loss date.


If you were in a different profession, perhaps owning a factory or shipyard, history shows that a
whole range of conditions may manifest themselves in your workforce decades after the fact (for
example asbestos claims). Latency in private medicine is nothing like this and should not be treated
as such.


At MRSL Enterprise we have the in-house expertise to accurately predict this latency aspect. There
are few professions that equal medicine for literature and data about the treatment and
performance of disease and trauma over time; the clinical performance of the procedures carried
out in private medicine in the UK is well understood. As we show, latency for claims varies between
3 and 10 years depending on your specialism (with the exception of obstetrics).

 

Obstetrics 40yrs Cover not available in commercial markets
Orthopaedic 10yrs Replacement joint issues can take time to emerge – eg 3M, Du Pont
Radiology 8yrs Seed migration will take time to emerge
Rheumatology 5yrs Allowing time to identify septic arthritis
Endovascular 5yrs Failure to save a limb and nerve damage might emerge more slowly
Cardiology 5yrs Restinosis, especially in diabetic patients, can take time to emerge.
Gynaecology 5yrs Anxiety and sexual disfunction can take time to emerge
Spinal 4yrs Migration of screws can take 4yrs to identify
Oncology 3yrs  
Cardiothorasic 3yrs  
Dermatology 3yrs Need to cover off skin cancer in consenting
ENT 3yrs  
Respiratory 3yrs  
General Surgery 3yrs  


The combination of the existence of this data and MRLS Enterprise’s extensive experience in risk
management and medical claims means that your cover will be in good hands.


Long Term Cover – but not at any cost!


Commercially sensible cover comes from a proper understanding of the latency within a particular
practice, from which appropriate advice can be given about retroactive dates and extended
reporting periods to take practitioners into retirement. Efficient cover arises from a partnership
between the medic and an insurance broker with the expertise to understand latency and place
proper cover at an appropriate price.


In this context Losses Occurring cover is not necessarily commercially sensible. Losses Occurring
cover provides protection for evermore against a claim – so a £10m limit Losses Occurring cover
every year for ten years provides £10m of cover for each of those ten years – which stacks up to
£100m of cover at the end of the period. All sounds good – but the insurer does not give that for
free – you have to pay for it.


As you are not the type of doctor or surgeon who is going to produce a £10m claim every year for
ten years – what is a more realistic and affordable option?


Looking at the data from NHS Resolve there is far less than one claim paid per year against each
surgeon. NHS Resolve reports that is receives around 10,700 medical negligence claims per year.
There are around 70,000 doctors on the specialist register in the UK. This means, at most (not all the
NHS claims will be against consultants) that an average surgeon would receive a claim every seventh
year not use anything like all of the cover offered by Losses Occurring cover.


Take a highly regarded spinal surgeon who has forty years in practice without a claim. If he had
practised privately for thirty of those years with cover at a £10m limit each year – he would be
potentially covered for £300,000,000 in claims. As brokers in the market, we know that is not cheap
and would advise that he had been significantly overpaying for his insurance cover.


Conversely, a surgeon who performs procedures with a latency of three years can be comfortable
there will not be a claim after six years – the latency period plus the limitation period in the law. A
Claims Made policy with a ten year run off for this is a very practical cover. The surgeon has £10m of
cover in every year, but no more, and that cover persists for ten years after retirement – by which
time the surgeon can be comfortable that there are no unexpected claims. We see this as good
protection for the doctor, whilst not incurring costly cover.


Is there a Goldilocks solution to Medical Indemnity – not too scant, but not too expensive?


Getting the right indemnity to protect yourself and your assets is an important part of your career
planning for a surgeon. Moving to commercial insurance early builds up the contractual certainty on
cover before a doctor has generated a significant period from which risk can arise from performed
procedures. In fact we would suggest that a doctor takes out commercial insurance before
commencing their private practice. However, if you already have a thriving private practice, we are
able to help you re-assess your insurance requirements.


MRSL Enterprise will work with you to ensure that you have the best cover at a cost to suit you. Your
loyalty with an insurance company is often rewarded as many insurers will give run off cover into
retirement for free after a doctor has been insured with them for three to five years.


Contact us


Contact Chris Cloke Browne or Roger Houston to plan the best approach for your requirements.
0203 0583733 or hppb@mrslenterpise.com

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