Medical Indemnity FAQ

MEDICAL INDEMNITY (Prudential Supervision and Products Standards) Act 2003 - "The Act"

Your Questions Answered

Q1. Does the Medical Indemnity Act mean that I will need to have a contract of insurance?

Q2. Is this insurance policy with DPL itself?

Q3. In what ways is this different from the cover I have had from DPL up until now?

Q4. What risks are covered by this insurance Policy?

Q5. Are all the benefits of DPL/MPS membership defined by the insurance policy ? If so, is this the end of DPL as a discretionary, mutual organisation?

Q6. How does the claims-made insurance policy deal with claims which are made by patients after 1/7/03, but where I had treated the patient before 1/7/03?

Q7. Do you still provide Part-time and Employer Indemnified etc categories?

Q8. What about Compounded Life Membership?

Q9. Are you maintaining the non-indemnified membership category if I wish to continue to receive your risk management material, even if for any reason I do not need (or want) the professional indemnity itself?

Q10. If my existing cover is with a different insurer, and I wish to change to DPL, what happens about any claims that might arise in the future, but which relate to the time when my policy was through this other insurer?

Q11. Will the amount of cover remain the same (i.e. unlimited) or will there be a cap or limit?

Q12. Is there any "excess" or deductible payable on each and every claim, like there is with some motor or property insurance?

Q13. What will happen when I retire or cease to practice dentistry? Do I have to continue to pay premiums ("run-off" ) to cover the possibility of a claim arising after I retire?

Q14. What happens if I ever leave DPL in the future, decide not to renew my MDA National Insurance policy for any reason, and take out a different insurer in Australia? How is run-off handled then?

Q15. Do you continue to offer periods of cover of less than 12 months?

Q16. What if I move state or need to change my membership category mid-year?

Q17. What if I leave Australia to work overseas?

Q18. Who do I contact if I have a problem?

Q1. Does the Medical Indemnity Act mean that I will need to have a contract of insurance?

The requirement for registered dentists, hygienists, therapists, technicians and prosthetists to make appropriate professional indemnity arrangements to provide responsibly for the protection of themselves and their patients, varies widely from State to State. In some States it is already a condition of annual registration, with specific minimum requirements defined, while in other states there is no such formal requirement at the present time.

However, where these healthcare professionals do enter into, or renew, any arrangements for the provision of medical indemnity, the Act requires that any such arrangement must be provided by way of a regulated contract (policy) of insurance. This does not apply to any arrangements that were already in place on July 1st 2003 (Questions 6 and 10 below will explain this). Top

Q2. Is this insurance policy with DPL itself?

No. DPL cannot itself provide such a policy because it is not an insurance company. The Act defines a variety of situations for which indemnity might be required, and stipulates that any indemnity offered to a healthcare professional in these specified situations, must be provided by a licensed and regulated insurer here in Australia.

The set-up and ongoing costs associated with establishing such an insurance company ourselves, specifically for dental professional indemnity risks, would be punitive and would necessitate an unjustifiably high burden of additional subscriptions for our members. We believe that our members' money is better spent on the provision of enhanced advisory and risk management services here in Australia.

Consequently, after giving the matter careful thought, we decided that our members' interests were better served by outsourcing the policy from an Australian insurance company which exists specifically for this purpose. Captive insurance companies which are owned by medical mutual discretionary organisations (MDOs) are obviously likely to be a better fit with DPL's values and philosophy, than any commercial (profit-making) insurer could ever be, but some would be a lot better than others in various material respects.

In late 2007, DPL carried out a formal review of its medical indemnity insurance arrangements, and drew up a list of key requirements that would need to be satisfied if members’ interests were to be fully protected. As a result of this detailed review of existing and possible alternative arrangements, dental indemnity insurance policies available to DPL members through DPL Australia are now underwritten by MDA National Insurance Pty Ltd ABN 56 058 271 417. MDA National Insurance holds the appropriate license from APRA (AFS licence number 238073) to conduct general insurance business, i.e. the provision of contracts of professional indemnity insurance for healthcare professionals. Using an insurance company such as MDA National Insurance, which is owned by another mutual not-for-profit organisation (Medical Defence Association of Western Australia Pty Ltd (Incorporated) ARBN 055 801 771– which in 2000 extended its operations to cover the whole of Australia, hence “MDA National”), is we believe, is the most satisfactory and cost-effective way of complying with the new legislation, while preserving the traditional values and benefits of being a DPL member. The appropriate insurance premium is paid to MDA National Insurance, which then issues and underwrites the individual policy in respect of the medical indemnity.

All the other benefits of membership are provided by DPL, just as in the past. DPL is still providing a general advisory service, and providing the publications, seminars and other risk management services. In addition, members report all new cases to DPL Australia, and where they relate to incidents covered by the MDA National Insurance policy, DPL Australia manages these cases on behalf of MDA National Insurance. The Advisory Panel of DPL Australia continues in its role under the Chairmanship of Dr John McNamara, and the Scheme of Co-Operation partnerships with ADAWA and ADANT have the same relationship with DPL as in the past. For Direct DPL members throughout Australia, the services available from DPL Australia Pty Ltd are also unaffected by these altered arrangements. Top

Q3. In what ways is this different from the cover I have had from DPL in the past?

For those situations covered by the Act, and reflected in the scope of the MDA National Insurance policy, MDA National Insurance has a legal obligation to provide cover under the terms of the policy (instead of DPL using its discretion in response to requests for assistance). The premium paid to MDA National Insurance reflects the scope of this legal obligation.

Prior to July 2003 when the Act took effect, indemnity in Australia had mostly been provided by DPL and other Australian (medical) mutuals on the same discretionary basis as exists in most parts of the world. This discretion had not been a problem in the sense that any companies were irresponsibly refusing assistance to members and thereby leaving patients uncompensated. Indeed, the mutuals had an impeccable record in this respect; because they exist only to protect and support their members, refusing to do so is simply not the business that they are in.

Many longstanding DPL members, including those who have worked overseas, have expressed their disappointment at the requirement for medical indemnity to be in the form of contracts of insurance, seeing this as a retrograde step necessitated by the legislation introduced by the Commonwealth Government to address what was essentially a medical problem, not a dental one. A secondary change resulting from this is that the medical indemnity insurance cover from MDA National Insurance is now provided under "claims-made" rather than "occurrence-based" arrangements. "Occurrence-based" (also known as "claims-incurred") means that the member is covered for all incidents arising from a period for which an appropriate subscription was paid, irrespective of the period of time that might pass between the date of treatment, and the date when the claim is finally made. The dentist does not need to remain a member at the time the claim is eventually made.

In contrast, "claims-made" means that the key consideration is the time when the claim is made, not when the incident occurred, although it is important to understand that not all claims-made arrangements are the same. In addition to covering qualifying incidents which both occur, and are reported during the currency of the policy, some policies are designed to respond to incidents that occurred before the inception of the policy (retroactive cover), while some allow incidents to be reported, in various specified situations, after the policy has expired (extended reporting periods).

DPL continues to believe that occurrence-based indemnity is far preferable, from the dentist's perspective as well as that of patients. However, the new legislation in Australia and the complexity of the insurance environment and its regulation, makes it much more difficult and expensive to provide occurrence-based cover, and far too much of what our members pay for their indemnity (the cost of which would need to increase sharply) would then be going in taxes related to the policy, or in the regulatory costs, instead of providing benefits to the members themselves.

In our view, this would make no sense at all, so we have explored other ways to ensure that our members' interests (and the interests of the patients treated by them) remain protected as effectively as they have been in the past.Top

Q4. What risks are covered by this insurance Policy?

The risks covered by the contract of insurance issued by MDA National Insurance include not only negligence claims, but also Dental Board inquiries and investigations, complaints of various kinds (including EOC/HRC/HSC/H&SCC/OHR/etc) whether formal or informal, and various other allegations arising from the practice of dentistry.

Everyone had different needs, however, and before acquiring any insurance policy you should read the policy wording to ensure that it meets your personal needs and requirements. Top

Q5. Are all the benefits of DPL/MPS membership defined by the insurance policy? If so, does this mean that DPL is no longer a discretionary, mutual organisation?

No - to both questions. The MDA National Insurance policy deals only with those elements which relate to the provision of medical indemnity within the scope of the Act, and where the need for a contract of medical indemnity insurance is now prescribed by Australian law. In these respects both DPL and MDA National Insurance will continue to comply fully with the relevant legal requirements.

However, there are many other benefits of DPL membership, not least our advisory, support, counselling, educational and risk management services, which are provided over and above the indemnity element, and these will remain outside the MDA National Insurance policy itself, but instead reflected in the membership subscription you pay to DPL. These benefits have been significantly expanded in recent years, and this process will continue. For the year commencing July 1st 2009, for example, DPL pays, on behalf of its members, any insurance premium that would otherwise be payable to obtain run-off cover in the event of permanently or temporarily (3 months or longer) ceasing to practise, or upon leaving Australia.

DPL also purchases Public Liability and Product Liability insurance on behalf of those members who need and want it - again, with the premium being paid by DPL on behalf of members. 

DPL remains a highly successful, autonomous, and wholly-owned subsidiary company of the Medical Protection Society, a discretionary mutual organisation which is bigger and stronger than ever before. Top

Q6. How does the claims-made insurance policy deal with claims which are made in the current year, but where I had treated the patient in a previous (policy) year?

The MDA National Insurance policy, and the associated insurance premium, is based upon a retroactive date which is chosen by the individual policyholder. This is the earliest date in respect of which the policy will respond to claims made about treatment provided on or after that date. For most (but not all) members who had occurrence-based, discretionary indemnity from DPL up to and including June 30th 2003, the retroactive date on their MDA National Insurance policy is 01/07/2003. If your membership with DPL was current prior to 1/7/2003, DPL can still assist you on the basis of its traditional "discretionary, unlimited, occurrence-based" indemnity with claims arising from treatment provided to patients before 1/7/2003, no matter when the claim might arise in the future. Your membership of DPL up to and including 30/6/2003 is unaffected by these changes.

You can request an earlier or later retroactive date from MDA National Insurance at the time you take out a policy with them. Known circumstances and previously reported claims will normally be excluded. The date you choose may affect your MDA National Insurance premium. Top

Q7. Do you still provide Part-time and Employer Indemnified etc categories?

Yes. Indeed, we have expanded the range of available categories to suit the needs of our members. For example, we have recently introduced an additional part-time grade, and an additional grade for members in the early years following graduation, which gives them up to eighteen months of cover at a special, discounted rate. For  dentists, there is a category which provides for the needs of those who have either no clinical practice at all, or whose professional activity is minimal. Top

Q8. What about Compounded Life Membership?

Here again, there is no change to our existing arrangements which are described in the pages at the back of the Annual Review which our members receive from us each year. Top

Q9. Are you maintaining the non-indemnified membership category if I wish to continue to receive your risk management material, even if for any reason I do not need (or want) the professional indemnity itself?

Yes - and the range of this material has been greatly expanded over the past year, with further new material being continually added.

Even if you choose to purchase your professional indemnity elsewhere from another provider, you can still enjoy access to DPL's risk management material at highly preferential rates, by maintaining this non-indemnity membership with DPL. Top

Q10. If my existing cover is with a different insurer, and I wish to change to DPL and obtain my insurance from MDA National Insurance, what happens about any claims that might arise in the future, but which relate to the time when my policy was through this other insurer?

On taking out a medical indemnity policy through MDA National Insurance, you will be offered a retroactive date to suit your needs (see Q6). In general, to ensure maximum protection for yourself and your patients, you should choose the date when you last had occurrence-based cover. With an appropriate retroactive date in place, the claims made MDA National Insurance policy can then respond to these claims while the policy remains in force, providing that you were not already aware of them when you applied for the MDA National Insurance policy, and also that the incidents have not already been reported to your previous insurer.

This would mean that DPL Australia would be able to advise and assist you with cases that arise in the future, but relate to treatment provided previously at any time since your retroactive date.

If you are unsure what retroactive date you need, contact DPL Australia to explain your requirements. Contact DPL Australia to explain your requirements. Top

Q11. Will the amount of cover remain the same (i.e. unlimited) or will there be a cap or limit?

Because of the legal obligations imposed by the contractual basis of cover, there will always need to be a cap (limit) on the insurance cover, in order to define the risk and thereby keep reinsurance costs at reasonable levels. All the other Australian insurers in the dental field also have a cap, for precisely this reason.

However, DPL members can be reassured that MDA National Insurance has deliberately chosen to set that limit at a sufficiently high level ($20 million for each claim, and in aggregate for the period of the insurance) that is amply sufficient for their needs, even for those working in the higher risk specialties. This level of $20 million is many times bigger than the biggest ever Australian dental claim. Top

Q12. Is there any "excess" or deductible payable on each and every claim, like there is with some motor or property insurance?

Generally not, although for a very small number of members who are included in DPL's Adverse Risk Membership programme, an excess may be payable and where this applies, the amount of the excess would be shown on the MDA National Insurance policy schedule. The members affected by this are notified separately.

However, to maintain consistency of approach in dealing with DPL's 55,000+ members around the world, members may be asked to contribute the fees they have claimed or received for treatment which proves to be unsatisfactory, so that they have not actually been left in the position of having profited from such treatment provision.

The basis for such contributions is set out in the policy itself, and is the fairest way of ensuring that other members are not sharing the cost of such unsatisfactory treatment, while leaving the dentist in question having benefited financially from the provision of unsatisfactory treatment. Top

Q13. What will happen when I retire or cease to practice dentistry? Do I have to continue to pay "run-off" premiums to cover the possibility of a claim arising after I retire?

Because the medical indemnity insurance from MDA National Insurance, is offered on a 'claims made' basis, it is necessary for the policy to be kept active, if it is to respond to claims made after a dentist has ceased practising, whether temporarily or permanantly. There are five separate situations which need to be considered:

1.  The dentist dies
2.  The dentist ceases to practise while the policy is in force, because of sickness or disability
3.  The dentist retires permanently from dentistry
4.  The dentist leaves Australia and continues to practise elsewhere
5.  The dentist ceases to practise for a period of three months or more (for example, because of undertaking further training, or maternity, or a career break or extended leave of absence for further study or other reasons).

The run-off requirements of both (1) and (2) will be met automatically by the policy for the remainder of the policy year, at no additional cost. Thereafter, MDA National Insurance can endorse the policy to provide enduring run-off cover at no cost, for as long as you remain eligible.  In other situations, DPL purchases the run-off policies from MDA National Insurance on behalf of the member, as a benefit of DPL membership.

In the case of (1) this spares the surviving family members and/or estate the worry and stress of having to deal with a claim that comes to light after the death of the DPL member in question.

In the case of (2) it is one less thing for the member and his/her family to worry about, and provides all concerned with the peace of mind of knowing that they have the continuing protection of an MDA National Insurance policy, and all the back-up and support of DPL.

The run-off requirements of (3) and (4) are met by DPL paying on your behalf, any run-off premiums that would otherwise be payable until you qualify for the free enduring run-off offered by MDA National Insurance.

The member in situation (4) will in most cases be able to transfer their DPL membership to the new country where they will be practising, and resume the discretionary, unlimited, occurrence based cover which DPL recommends and continues to provide outside Australia. It is only the recent legislation that prevents us from continuing to provide here in Australia, what we believe to be the preferred professional indemnity product for dentists. See also question 17 below.

The run-off requirements of (5) will vary from one individual to another. The arrangements available through MDA National Insurance will allow a choice of options to provide maximum flexibility for how a member wishes to keep a policy "active" during a maternity break, and (for example) if working part-time for any period leading up to, or after the period of absence. Similar options apply in the case of postgraduate study leave, career breaks and other periods of extended absence lasting for three months or more.

In each of these situations, DPL pays on your behalf, any run-off premium that is necessary to maintain the currency of the policy during your period of absence.

Under the MDA National Insurance arrangements, the policy will then respond to claims arising in the period of absence, relating to incidents in earlier years when the member held an MDA National Insurance policy in an appropriate membership category. Top

Q14. What happens if I ever leave DPL in the future, decide not to renew my MDA National Insurance policy for any reason, and take out a policy with a different insurer in Australia? How is run-off handled then?

You can ask your new insurer to offer you a policy with the same retroactive date as your existing policy. This would mean that any previously unreported claims regarding incidents that took place while your previous policy was in force, but which are made after the commencement of your new policy, would be covered by your new policy (subject to the terms and conditions of the policy).

As a general guide, it is sensible to ensure that you have retroactive cover back to the last date when you had occurrence-based cover. If you were a DPL member up to June 30th 2003, you would only need run-off cover for any period of DPL membership from July 1st 2003 onwards (or later - see Q9 above), because for any period of DPL membership prior to that date you would still be entitled to seek occurrence-based indemnity from DPL, rather than requesting retroactive cover from your new indemnifier (which may well be specifically excluded by their policy anyway). Top

Q15. Do you continue to offer periods of cover of less than 12 months?

Yes - we offer a completely flexible period of membership for any periods of up to a year, but ending on June 30th annually, the subscriptions being calculated as a proportion of a full year's subscriptions. In the case of new graduates, a special membership category exists, which starts on the date of graduation (or a subsequent date chosen by the member), and continues not only up to the end of that insurance policy year (i.e. the following 30th June), but for a further year after that. This means that the newly qualified dentist, hygienist, therapist, technician or prosthetist would normally have nothing more to pay for up to 18 months. Top

Q16. What if I move State or need to change my membership category mid-year?

It is a member's responsibility to ensure that they are in the correct membership category at all times. Your entitlement to cover may be affected if at the time of an incident you are in an incorrect category, paying an insufficient subscription to DPL and/or an incorrect premium to MDA National Insurance.

Your category and subscription can be adjusted if necessary, upon confirmation of the relevant change to DPL Australia. Please note that minimum periods apply both in the case of MDA National Insurance, and your DPL membership subscriptions.

There is no premium adjustment (either way) if you change State mid-year. Simply let us know where you are, at the time you move State, and any adjustment can be made at your next renewal, for the following year. Top

Q17. What if I leave Australia to work overseas?

It is very important to understand the nature of claims made insurance. Because your MDA National Insurance Policy ceases to be valid, as soon as you fail to renew your policy and pay the relevant premium to MDA National Insurance, you do need to make arrangements to cover any claims that might be made against you in the future, about treatment you provided whilst working in Australia.

Providing that you have notified us of your plans in advance, DPL pays, on your behalf, any premium that is necessary to keep your policy "alive", until you qualify for the free, enduring run-off offered by MDA National Insurance. This enduring run-off is achieved via an endorsement to your policy at the relevant time.

In some circumstances, it may be sensible to arrange this retrospective cover as part of the new indemnity arrangements you make outside Australia. You are strongly advised not to leave Australia without having organised some kind of cover to protect yourself (and your patients) against things that come to light after you have left Australia. Top

Q18. Who do I contact if I have a problem?

DPL members in all states and territories - except those whose DPL membership is arranged through the Scheme of Co-operation with ADA(WA) - should contact DPL Australia for assistance, just as they have done in the past. Those whose membership is arranged through the Scheme of Co-operation partnership with ADA (WA), should contact the Perth office of ADA (WA Branch) initially as usual. The longstanding arrangements for the provision of local assistance are unaffected

In terms of service delivery, our aim is to ensure that DPL members continue to receive the benefits of the best professional indemnity, advisory and risk management package in Australia. Top

DPL Australia Pty Ltd ('DPLA') ABN 24 092 695 933, CAR No. 326134 is a Corporate Authorised Representative of MDA National Insurance Pty Ltd ABN 56 058 271 417, AFS Licence No. 238073. DPLA members have access to the Dental Indemnity Policy underwritten by MDA National Insurance Pty Ltd.

DPLA is a wholly owned subsidiary of the Medical Protection Society Limited (MPS) (registered in England No. 36142) at 33 Cavendish Square, London, W1G 0PS. ‘DPL member’ and ‘DPLA member’ means a non-indemnity dental member of MPS served by DPLA. The benefits of MPS membership are discretionary and set out in its Memorandum and Articles of Association. Neither DPLA nor MPS are insurance companies.

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