Why do all this, surely that’s what you pay insurers for?

This is the third part in a series of short articles designed to help medical practitioners manage their
relationship with insurers. The objective is to minimise premium fluctuations going forward and to
avoid unpleasant surprises in cover terms as well.

Previously we looked at the position of the parties to a claim and spotting cases that could give rise
to a complaint or claim. In a future article we will look at ways of approaching circumstances where
you have concerns. Here, however, we ask why you would want to bother doing this, as opposed to
handing everything over to insurers. I have mentioned previously that insurers are anxious about
numerous small payments to see off unmeritorious or low value cases. But why is this?

Insurers are very aware that they are obliged to honour a contract, where the policyholder has the
protection of the Insurance Act, 2015. Simply, the policyholder has increased rights to the protection
of the contract if a breach of warranty or fraud becomes an issue. The Act gives rise to a duty of a
fair presentation of the risk, which is a lesser duty upon the policyholder than previously.

Contrary to what you might think, our experience is that insurers do not like avoiding claims for
breach of warranty and the like and the Insurance Act 2015 makes this much more difficult.

Equally, following the financial crisis of 2008/09, governments around the world have sought to
strengthen the financial strength of insurers and banks. UK insurers are no exception.

So, all in all, insurance cover is an expensive option to fund dealing with numerous small value cases.
The medical defence organisations do not have to comply with the same financial stress tests as
insurers, nor are their membership rules within the Insurance Act, 2015. The result is there is no
judicial oversight.

We believe the trick is to have the benefit of a regulated insurance contract, with the protection of
the Courts if you think insurers have served you poorly. Yet, you do not present numerous small
value cases which are disproportionately expensive for insurers and therefore the trigger for
significant price swings or changes in cover.

It is entirely possible to achieve this balance and to have the best of both worlds… In the next article
we will look at how that might be achieved.

To be continued…

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