Dr Helen Kaney, Lead for Medico- and Dentolegal Services at Dental Protection, looks at some important differences between indemnity and insurance, and what discretion really means.
The relative merits of discretionary indemnity and insurance might not be an issue that some dentists spend a lot of time deliberating, and particularly so at a time when dentists and the dental team are working hard to resume patient care as much as possible while sustaining their practice. However, over the last few years, a lot has been written in the UK about dental indemnity and there have been several new entrants to the market. Some dental professionals are interested in learning more about indemnity, insurance and the various factors to consider when making an indemnity choice, in order to ensure they have the right protection for them.
Types of organisation that provide indemnity
Traditionally, many dentists in the Caribbean and Bermuda were indemnified by a mutual indemnity organisation. In recent years, a greater number of indemnity options have become available, including ‘traditional’ mutual discretionary indemnity, ‘claims-made’ insurance and ‘occurrence-based’ insurance.
Dental Protection has remained a steady and trusted partner for many dentists in the Caribbean and Bermuda for many years, with the assistance and protection provided for members to date being based upon mutual discretionary indemnity. Members of Dental Protection are part of a mutual organisation that they collectively own. Members pay subscriptions that go into a central pool. If they face a complaint, claim, regulatory investigation or any other matter, members have a right to request assistance.
As the organisation is owned by members, the initial default position is to see how the member seeking assistance can be helped. Once a request for assistance is approved, an experienced team of dentolegal consultants and lawyers can then help by offering the right level of assistance without being restricted by small print, financial caps or exclusion clauses.
This is different to insurance products where the dentist has a contract of insurance which specifies what protection the insurer will and will not provide, along with details of any exclusions and caps. In such a scenario, it is important to have carefully read the policy wording and any policy schedules to ensure that there is full understanding of what is covered and what is not. The devil is in that detail.
I am in the unique position of having worked for both an insurance company and now, for the last 12 years, a discretionary indemnity provider.
I worked for The St Paul International Insurance Company Limited (‘The St Paul’)1 as a dentolegal adviser in the UK from 1999 to 2001. The St Paul saw the clinical indemnity market in the UK as an attractive business, which is how insurance companies as commercial organisations must think, and they provided cover to UK doctors and dentists on a claims-made basis.
Like most individuals, I have several insurance policies to cover many of the usual risks in life. However, The St Paul pulled out of the UK indemnity market in 2001 after only two years. This left their insured UK dentists scrambling for indemnity cover and many decided to become members of Dental Protection at that time.
The way I see it, both discretionary indemnity and insurance can provide dental professionals with the protection they need. What is most important to consider is whether the organisation you are with will provide a reliable, high-quality service and whether they have a long-standing history and financial position which lets you know that they will be here for you long into the future.
Reliability and responsiveness
The first consideration for many is whether protection will be available when you need it.
Members of Dental Protection are part of an organisation, the default position of which is to always consider how they can help to protect you. There appears to be a belief in the minds of some individuals, and this belief is regularly expressed on social media, that Dental Protection can, due to the discretionary nature of the indemnity currently provided, refuse or even withdraw assistance, almost on a whim. That is not correct. Discretionary indemnity organisations must follow the law around how discretion is exercised, to ensure that it is fair and consistent and not arbitrary, capricious or irrational. Medical and dental defence organisations are also governed by their Articles of Association, which form a contract between the defence organisation and the member. If the articles are breached, members have recourse to the courts.
By way of contrast, an insurance contract clearly specifies when the insurance company will step in to support and when it will not and some individuals do prefer to have that contractual certainty, rather than feeling that they are relying on a discretionary product. In fact, each type of indemnity product can very well meet an individual’s needs, depending on what those specific needs are.
It is important to check the fine print of some insurance policies and consider whether there are financial limits, or caps, imposed. Some insurance products have financial limits on such legal costs as well as imposing excesses which could mean that an individual has to fund some of their own legal costs or risk being unrepresented before the regulator.
A further consideration is whether your protection will be responsive to your needs.
Discretionary indemnity has always been considered flexible and responsive, since the scope of assistance offered to the member can be wider than the precise policy wording of contractual insurance. Discretionary indemnity allows Dental Protection to respond to changes in the dentolegal environment and assist members with emerging risks that may not have been foreseen at the time membership was taken out. This is especially important when new challenges arise as has been the case during the COVID-19 pandemic.
Quality of service
Dentists also need to be assured of the quality of the support they will receive.
Dental Protection has a long history of providing an excellent quality of service to members, with experienced dentolegal consultants, case managers and lawyers available to advise, guide and support members when they are facing the most stressful situations in their professional lives. Not all indemnity providers offer the same level of service and assistance.
Dental Protection has the largest team of experienced dentolegal consultants of any indemnity provider internationally, and a member can speak with a dentolegal consultant whenever they need to. Our legal and professional expertise can ensure your issues are resolved as quickly as possible, with the least upheaval and impact on your career and professional reputation.
Financial strength and longevity
It is, of course, vital that an indemnifier is in a strong financial position and has a long-term commitment to protecting members.
The good news for members is that Dental Protection is in a strong position to provide financial security2. Data published by Dental Protection3 revealed that almost 40% of its estimated annual claims costs in the UK in 2018 related to cases where treatment started ten or more years before the claim was made. Claims are increasingly being made for larger amounts, often in excess of £100K. Therefore, for an indemnifier, both financial security and longevity are vital, so it is important to consider how likely it is that your indemnity provider will be here for you for the long term.
Who takes the risk – you or the indemnity provider?
Finally, dentists need to understand whether their protection is 'occurrence-based' or 'claims-made', and what extra steps you might need to take if you opt for the latter.
Both the subscription charged by mutual organisations and the premiums charged by insurance companies are analysed and decided upon by actuaries, based on the risk to the mutual fund or reserves of the organisation concerned.
With occurrence-based indemnity, the responsibility for any future risk lies with the indemnity provider who ensures that the subscriptions collected today are sufficient to guarantee that the organisation will be there when needed to help members in perhaps 10, 15 or 25 years’ time.
With claims-made insurance, the extent to which risk is carried into the future, and by whom, depends on whether the dental professional can secure run-off or ‘tail’ cover when they end their policy or membership, retire or leave the profession. Therefore, claims-made policies do not need this element of future risk priced into their premiums, which is why they may appear more affordable in the short term.
If an individual is not offered or is unable to purchase the necessary run-off cover when they wish to leave, that individual with a claims-made policy has no protection in place if a claim later arises and the incident that gave rise to the claim was not reported in accordance with the terms of the policy. The individual would only be covered if they was insured when the claim arose and was reported and they have separately purchased another insurance policy with a retroactive date dating back to when the clinical treatment which is the subject of the claim was done. This can be complicated and an individual really needs to fully understand the type and nature of the indemnity that they have in place and be confident that it is sufficient for their needs.
With occurrence-based indemnity, any incident that arises from the time they are with their indemnity provider — even if the complaint or claim is raised many years later — is indemnified in perpetuity. Hence, there is no need to purchase additional cover if you take an extended break in your practice, retire, or switch providers.
Claims against dentists are now arising in the UK 15 or even 20 years or more after the clinical care was provided, and the same could happen in the Caribbean and Bermuda. A run-off period of any less than these timeframes will not protect a dentist in the event of a clinical negligence claim being made many years into the future.
Another important aspect to consider in most, if not all, claims-made policies is the "incident reporting" requirement. This provision requires the dentist to report facts or circumstances of an adverse incident that might give rise to a claim in the future, and to do so within a prescribed period of time in order for the claim to be valid under the terms of the policy.
Although there are differences in the indemnity products available, provided these differences are understood, then it is really a matter of personal preference regarding what suits each individual.
With dentists facing significant financial pressures due to COVID-19, Dental Protection has recently been able to pay the equivalent of two months’ subscription fees back to members, as well as enabling members to adapt their membership to reflect the changing level of work they are doing. This is a clear example of the benefit of being with a mutual organisation that exists to protect your interests and not to make profit.
While some indemnity products may only provide help with clinical negligence claims and legal assistance before the regulator, we believe that we offer an extensive service – including assistance with dentolegal and ethical advice, patient complaints, disciplinary procedures, inquests, dentolegal support in regulatory matters and media advice.
Ultimately, the decision to choose between discretionary indemnity and insurance or occurrence-based and claims-made protection, rests on your individual circumstances. The indemnity provider or insurer that you opt for should be able to explain how they will protect you. Dental Protection would be more than happy to answer any questions you might have that are not addressed in this article.
1The St Paul merged with Travelers in 2004. https://www.travelers.co.uk/about-us/history Accessed 18 January 2021
2The Medical Protection Society Limited, Made for Members— Annual Report and Financial Statements 2019: https://mpscdnuks.azureedge.net/resources/docs/mp/financial-information/annual-report-2019-web.pdf
340% of claims costs relate to treatment started over ten years ago. https://www.dentalprotection.org/uk/articles/40-percent-of-claims-costs-relate-to-treatment-started-over-ten-years-ago Accessed 18 January 2021
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