Indemnity Insurance for Doctors: All you wanted to know

Professional indemnity insurance

According to a survey conducted in 2016 by the National Law University, Bengaluru, there has been a whopping rise of 400% in cases related to medical negligence filed in consumer court. Although only 10-15% of cases are genuine, with doctors being found guilty, the medicos in the remaining 85% are left to defend themselves. The need to be financially and legally insured is thus gaining velocity to protect the doctors if they are sued for mistakes and negligence. The reasons cited for the rise in the number of cases of medical negligence, as per the Maharashtra Association of Resident Doctors (MARD), which surveyed 1,200 resident physicians, are as follows:

• 30% of cases are due to the patients' expectations not being met, regarding complete health recovery, after paying high medical expenses
• 20% of cases are caused by patient anxiety and limited understanding of the technical details of the case
• Only 15% are genuine cases of error or negligence. Out of these, the majority of cases are due to improper consent from relatives before performing certain procedures or switching hospitals, or inadequate documentation of diagnosis and treatment

Additional read: How to choose the best professional indemnity insurance policy for doctors

What is indemnity insurance for doctors?

Professional indemnity (PI) is an insurance plan to financially safeguard medical practitioners against legal costs and claims for compensation by the patients in case of a legal row. Legally, it is an exemption from liabilities for damages. The uncertainty in the amount of compensation to be paid is one of the greatest fears. At times, the amount is quantified based on the mental trauma and stress that the course of events has caused to the patients. In such cases, patients’ expectation of monetary compensation is huge.

Due to the rise in litigations and frivolous charges, doctors are driven to take indemnity insurance every year, some of them to the tune of lakhs of rupees. Senior surgeons are estimated to pay around 10% of their annual income towards the premium of PI insurance. A premium for any cover is usually around 0.3 %-1% of the sum insured.

Additional read: Why should doctors choose Bajaj Finserv's Indemnity Policy?

Coverage under the policy

Mostly, the professional indemnity policy offers cover to the medical practitioner depending on the features of the policy, such as: 

• Extent of financial damage or loss to the victim which is not a result of willful neglect
• Unintentional errors and omissions
• Insurance extended to other qualified employees, unqualified employees, and partners in the same practice
• Cost of defending oneself in the court of law

Compensation from the insurance company, concepts of AOY and AOA

The policy will pay the sum assured that was set as a limit for a particular cover. Anything beyond the limit is to be borne by the practitioner additionally. The cover to be taken has to be decided based on the factors such as the risk involved in practice and the probability of occurrence of events that may lead to litigation. The sum insured is referred to as the limit of indemnity and is fixed per accident and policy period. It is called the Any One Accident (AOA) limit and the Any One Year (AOY) limit. The ratio of AOA and AOY limit needs to be chosen while taking a policy. It is the deciding factor for the amount payable for each accident or incident of negligence. The types of AOY and AOA ratios offered depend on the insurance company. It usually ranges from 1:1 to 1:4.

For example, consider a doctor with a professional indemnity insurance cover for Rs. 5 lakh and a policy of AOY-AOA ratio 1:2. If he is liable to pay Rs. 3 lakh as compensation for a lost case, the company will only pay Rs. 2.5 lakh since the policy has to cover two accidents in a year. Therefore, the practitioner will have a cover of the remaining Rs. 2.5 lakh for another accident during the same period.

Exclusions

Professional indemnity may not cover the claims arising from the following aspects of practice

• Medical treatment was given for weight loss, plastic surgery, genetic damages, and conditions associated with AIDS
• Criminal act, penalties, fines, punitive and exemplary damages, intentional non-compliance, willful neglect, deliberate act or loss of goodwill
• Medical practice is done under the influence of alcohol or narcotics

With increased awareness of the rights, it is imperative to have professional indemnity insurance for doctors—this insurance will take care of the medical practice's legal and financial implications.