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MDU’s ‘half price indemnity’ offer will leave GPs liable to future costs, warns DH

The Department of Health has warned GPs about the potential liabilities they may incur by taking up a ‘half-price indemnity offer’ launched hours after the Government announced a state-backed scheme.

In an update to its guidance on the state-backed indemnity scheme, the DH has said that GPs who take up the MDU’s offer will not be covered for any claims that originate between purchasing the cut price cover and the time the Government scheme is introduced.

This means that GPs will need to purchase extra cover from the MDU – at a cost of at least £500 to £1,500 a year every year – in case of any incidents that take place between now and the implementation of the state scheme that are not settled before then.

The MDU announced its half-price offer mere hours after health secretary Jeremy Hunt announced that there will be a new state-backed indemnity scheme. Under the MDU’s offer, anyone renewing or purchasing cover from 1 November will see their usual fees cut by 50%.

When announcing the scheme, the MDU said that the half-price scheme will cover any claims made and settled before the implementation date, while the Government would cover any claims that are settled after then – which will be April 2019 at the earliest.

A booklet released by the MDU at the time of the announcement said: ‘We would expect much of the cost of claims arising from your year of membership to be assumed by the state-backed scheme, and so we are providing the benefits of membership relating to clinical negligence claims arising from such work on a “transitional basis” until such a scheme is established.’

However, the DH has refuted this. The Government’s fact sheet says that, with regards to the period from now until the state-backed scheme is introduced: ‘The Government does not currently plan to include this run-off cover in a state-backed scheme. GPs with claims-paid or claims-made indemnity policies would therefore be required to purchase such cover separately themselves at the point they move to a state-backed scheme.’

‘Any GP purchasing an indemnity product on a reduced cover basis should make themselves fully aware of the terms under which it is being offered, taking into consideration how they will cover themselves after the period of cover has expired and the cost of run-off cover.’

The MDU’s website reveals that they will be offering ‘extended benefits rights’ after the state-backed scheme is introduced.

It said these rights ‘are likely to cost between £500 and £1,500 per year for those leaving during the first year of Transitional Benefits membership depending on the type of work a member has been doing’.

They ‘may be higher for those leaving during a second year of Transitional Benefits membership, should the state-backed indemnity scheme not have been introduced by then’.

The Medical Protection Society criticised the MDU’s decision to launch a new scheme at a time when ‘crucial details are unknown’.

Simon Kayll, CEO at the MPS, said: ‘While the MDU offer may be appealing at first glance, GPs should understand that they are being given a different indemnity product, not a discount on their current arrangement. The statement from the Department of Health confirms this.

‘MDU members have been given little choice but to move onto a different product and pay additional fees at the end of their membership to ensure they are fully protected from claims that could still arise from their time with the MDU.

MDDUS chief executive Chris Kenny said: ‘The MDU’s “transitional benefits” are not remotely comparable to the gold standard occurrence-based membership offered by MDDUS.

‘The average claim takes around three years to report after the incident that caused it, and another two years to manage through the legal process, so we think MDU members will see little practical value from this new product and, as the Government statement makes clear, GPs will be hit with an unknown bill for run-off cover as well.

‘MDDUS members know they can place their trust in us to do the right thing. We will not sell them short with an ill-thought out and second-rate membership offering that places them at individual risk.’

Dr Grant Ingrams, a a member of the GPC and GP partner in Leicester, said: ‘This revised scheme reminds me of when St Paul (USA Insurer) started up in the UK. Initially doctors started to change to them as the cost was much lower, but when it was realised that “run off” insurance would need to be bought separately the amount of doctors changing plummeted and St Paul withdrew from the market (circa 2002).

‘Overall, the new guidance means that although MDU members may benefit from 50% reduction for 1-2 years, due to run off cover the total cost may be more.’

The MDU has been approached for comment.