What is happening to Indemnity Cover for Doctors and Dentists in the UK?

On 6 December 2018 the government ran a short consultation exercise that concluded on 28 February 2019. The consultation was entitled “Appropriate Clinical Negligence Cover”.

In short, this was the government’s worry:

“There are concerns that the current arrangements held by healthcare professionals who are not covered by state-backed schemes could prevent patients getting appropriate compensation and put healthcare professionals at risk of being personally liable for the costs of claims.”

The history of dental indemnification and insurance is confusing. In a nutshell, the majority dentists and many GPs in England and Wales are indemnified by Mutual Medical Defence Organisations (MDOs) rather than being insured by a contract of insurance. The principal difference is that the indemnifier is not contractually obliged to meet the costs of a claim against the doctor or dentist in the way that an insurer is. As a mutual organisation, the indemnifier has to balance the interests of the member facing a claim or claims and the interests of the rest of the members: the indemnification is discretionary. The other significant difference is that MDOs operate, largely, on a claims-occurred basis (so it doesn’t matter if the claim is reported after the membership has ended) whereas insurers operate on a claims-made basis so that there is no cover if the claim is made after the insurance policy has ceased to be paid for.

It wasn’t even until 2014 that such indemnification was compulsory as part of the registration process with the regulator in dentistry, the GDC. It had been on the statute books, if memory serves, since 2005 but didn’t ever come into force until 2014.

In Australia, things have been different since 2002 when the country’s largest MDO went into liquidation. From July 2003 insurance rather than indemnity has been compulsory in Australia. The UK government is asking in the consultation whether the same should happen here.

The consultation document (which is available online at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/777469/Clinical_negligence_indemnity_consultation.pdf) sets out that leaving things as they are “is not preferred by the Government at this stage.” That is printed in bold in the document just so that everyone has got the message.

The second option was to allow the regulators to amend their rules or issue guidance rather than introduce legislation. Whilst not written in bold this time, “This is not a preferred approach for Government….”

The third option, “the Government’s preferred option at this stage” is to ensure that all regulated healthcare professionals in the UK not covered by a state-backed indemnity scheme hold appropriate clinical negligence cover that is subject to both the FCA and the PRA.

In a published response with a “time to read” of 1 minute, Dental Protection Limited said on 1 March 2019 suggested an alternative: a mandatory Code of Conduct for discretionary providers. MDDUS said pretty much that the proposals would not better protect patients.

On 25 February 2019 MDU published its response. It drew attention to the withdrawal of St Paul from the dental insurance market in 2001 leaving “thousands” of doctors and dentists to go back to the MDOs. Of course, if the Government’s preferred option comes to pass, there wouldn’t be an indemnifier to go back to and the insurer would be regulated in a way it wasn’t in 2001. MDU has in the past operated with both indemnification and insurance and back to indemnification.

Watch this space but is it Australia, here we come?