Medical indemnity concerns

Medical indemnity concerns

It is imperative that medical indemnity premium growth is kept in check to ensure patient access to care is not jeopardised.

MEDICAL INDEMNITY insurance is critical to ensuring doctors have the confidence to practice, particularly in high-risk specialties. For more than two decades, the Australian Medical Association has worked to ensure a stable, secure system of medical indemnity in Australia. 

AMA (NSW) members have reported feeling the sting of sharp increases in medical indemnity insurance premiums this year. In some instances, our members have also raised concerns of “risk surcharges” being imposed by their indemnity providers, often with little warning.  

In this article, we address the key findings of AMA (NSW)’s medical indemnity survey and present issues affecting the stability of the medical indemnity industry. As we discuss below, key to this stability is Government funding and it is the responsibility of the Government, not of doctors and patients, to intervene when this stability is threatened. 

Survey results

Recent feedback from AMA (NSW) members about increases to their medical indemnity premiums prompted us to conduct a member survey to gauge the extent of these cost rises.

This survey was conducted over five weeks and received over 360 responses from members insured by:

1. Avant Mutual Group Limited (49% of respondents);

2. MDA National Insurance (17% of respondents);

3. Medical Insurance Group Australia (15% of respondents);

4. Medical Indemnity Protection Society (10% of respondents);

5. Berkshire Hathaway Specialty Insurance, distributed by Tego Insurance (7% of respondents).

Almost 80% of respondents indicated that their premiums had increased over the last two years. The amount that premiums rose by varied quite a bit, but the median increase was 20%.

Close to one-fifth of respondents (18.53%) revealed that they also had a risk surcharge applied to their premium in the last two years, with prices ranging from $1,000 to $20,000.

The survey also found that 10% of respondents had been advised by their indemnity providers that their premium will likely increase if a further complaint or claim is made against them. 

Threat to stability

Medical indemnity providers have indicated recent cost increases are the result of medical inflation, social inflation, and speciality specific issues – all of which have risen in response to the pandemic. At the same time, we have also seen the devastating consequences of natural disasters in the last few years which has also placed pressure on the insurance industry.   With the cost of premiums rising, so does concern about the future stability of the medical indemnity system. These concerns are not new, and many will recall the medical indemnity crisis of the early 2000s in which sky-rocketing medical indemnity costs brought our health system close to the brink of collapse. 

We have seen many years of stability in the medical indemnity system with the implementation of government schemes in response to the crisis almost two decades ago, including the Run Off Cover Scheme, Exceptional Claims Scheme and Premium Support Scheme. However, the effects of the pandemic and recent natural disasters on the insurance and re-insurance markets are likely to persist for the foreseeable future and have the potential to threaten this stability. 

It is imperative that, amid these issues, medical indemnity premium growth is kept in-check to ensure patient access to care is not further jeopardised by unaffordable indemnity insurance costs. This concern is particularly pressing given the negative impact that the pandemic has had our already financially strapped health care system. The AMA is monitoring medical indemnity premiums and will, as it did in the early 2000s, seek government support and intervention to ensure the viability and vitality of medical practitioners and medical services.  

Reminder

Medical indemnity insurance is a requirement for all registration. The importance of medical indemnity can be overlooked by doctors who, understandably, are more concerned about their rising premiums. At the same time, we acknowledge the pressures doctors may experience and that they may feel they are being compelled to practise ‘defensive medicine’ out of fear of further premium increases. This can place a wedge between doctors and their patients.

Medical Indemnity providers are an important source of advice and support when complaints or claims are made.

AMA (NSW) encourages members to engage with their indemnity provider and ask questions about their premiums if concerns arise. All indemnity providers have a complaints process if a medical practitioner may be unhappy with a decision made regarding, among other things, their premium and there is an external right of review to the Australian Financial Complaints Authority.  

Medical practitioners should regularly review risk management processes and procedures to ensure they are proactively taking steps to manage and minimise potential risks in their practices. 

AMA (NSW) regularly meets with medical indemnity providers and will continue to engage with them on the issue of premiums. AMA (NSW) and the medical indemnity insurers have a common interest in ensuring a viable system now and into the future.  

The AMA (NSW) Workplace Relations Team is available to assist members with advice and support regarding risk management, complaints and claims made in your practice.  

If you would like further information on the matters above, please contact our Workplace Relations Team on +61 2 9439 8822 or workplace@amansw.com.au

ABOUT THE AUTHOR

Melanie Fayad is a Workplace Relations Advisor (Legal & Policy) and can assist members with enquiries regarding risk management, complaints, and claims made in your practice.