Why are indemnity costs increasing?

Dental professionals must have adequate and appropriate professional indemnity before they can treat patients, but how can they be sure indemnity providers are providing good value for money? John Makin answers 10 probing questions about indemnity.

1. Why have indemnity costs increased for some dental professionals over recent years?

Dental Defence Union (DDU) subscriptions are set as low as prudently possible to ensure there is enough money in our mutual fund to meet future claims and legal expenses. Over the past few years we have seen a significant year-on-year increase in the number of claims brought against our members, along with a sharp rise in compensation and legal costs. Claims that run into hundreds of thousands are no longer unusual. For example, the DDU’s highest dental claim settled in 2017 was for over £325,000. All these factors have to be reflected in the cost of membership.

The vast majority of DDU members pay our standard subscription rates, reflecting that their risk is in line with the majority of their colleagues.

2. Do dental defence organisations like the DDU make a profit at the expense of the profession?

No. The DDU is part of a not-for-profit mutual (the MDU), which is owned and funded by members – dentists and doctors.

Our subscriptions include no profit element, no insurance premium tax and no broker or agent fees. Nor do we have to pay shareholder dividends. All our resources, time and effort are invested in supporting and defending members.

3. Are dental professionals penalised for calling the DDU advice line?

No. Providing dentolegal advice to members is one of our core services and we positively encourage members to contact us for help at any time, whether pre-emptively when they need guidance on how to approach a potential matter or when something has gone wrong.

Our dentolegal advisory team is made up 100% by dentists with personal experience of UK practice. We can assure members that calling us to seek advice or writing to us with general dentolegal or risk management queries will not affect their subscription. We encourage members to contact us whenever they need our input and we speak to many thousands of dental professionals every year on our 24-hour advice line.

4. Does there need to be more competition in the indemnity market to drive down costs?

As well as the three dental defence organisations, there are a number of commercial and specialist insurers in the market that provide indemnity for dental professionals, so there is no shortage of competition.

However, the fact is that most dental professionals belong to a dental defence organisation because they offer more than indemnity for negligence claims. DDU membership includes access to expert dentolegal advice from dentists; legal support and assistance with performance, disciplinary and even criminal investigations and hearings relating to your clinical work; help with press enquiries; and online CPD.

5. Why can some commercial insurers undercut you on price?

There are significant differences between insurance from a commercial provider and the indemnity currently provided by dental defence organisations.

The benefits of DDU membership are provided on an occurrence basis, which means that if an incident occurred while a member is in active membership, they can seek assistance whenever in the future they are notified of a problem. This could be 10 days, 10 months or even 10 years after the incident took place – as long as they were a member of the DDU at the time they saw the patient they can come to us for help.

By contrast, insurance companies usually offer cover on a ‘claims-made’ basis, which means that a dental professional must have cover in place when they report a claim and when the incident took place, which could be many years earlier. If the dental professional wants to change provider, they will usually need to buy, at an extra cost, run off cover, which may be required for years.

6. Why isn’t there a discount for members who have not had a claim?

Because DDU members are able to report a claim at any point in the future arising from an incident that happened while they were a member, it is not possible to offer no-claims discounts. It is always possible that a claim might arise from treatment provided during a previous year.

Over 45% of dental claims are brought more than two years after the date the patient was treated and almost a quarter are brought more than five years later.

7. Does discretionary indemnity, provided by the DDU, mean you can arbitrarily withdraw support for a dental professional?

While the DDU’s assistance or indemnity is provided at our board of management’s discretion, the board has a legal obligation to act fairly, in the interests of our members and in accordance with our memorandum and articles of association. This document is publicly available on our website, along with our member guide, which gives examples of the types of circumstances where the DDU is unlikely to provide support.

At the same time, we also retain the discretion to be flexible and responsive to the needs of members and support issues in the interests of the wider membership. Unlike an insurance policy, there is no ‘small print’ buried in a long list of exclusions; no limits on the size of claims we can indemnify; and no excesses to pay.

8. Would you refuse to indemnify a dental professional if they represented too big a risk?

As part of a mutual not for profit organisation, we must act in the interests of all our members, which includes monitoring for and managing risks.

When considering new applications for membership from dentists who want to join the DDU, we take into consideration the interests of our existing members and the risk any new applicant may pose to the mutual fund. This includes the requirement for a letter of good standing from their current indemnity provider.

9. Does the DDU settle claims on economic grounds?

Such an approach would be detrimental to members as it would set a damaging precedent. In fact, in 2017, we successfully defended 58% of dental claims, despite the fact that claims are carefully selected by specialist claimant lawyers in advance based on those they expect to win.

When we are able to, we’ll defend members all the way as was illustrated in our recent Court of Appeal Ombudsman judgment. If there is clear evidence that a patient has suffered avoidable negligent harm, we will ask the member’s agreement to negotiate a reasonable settlement as quickly as possible as this is in
everyone’s interest.

10. What is the DDU doing to fight the rise in compensation costs fuelling indemnity inflation?

The DDU and MDU have been actively campaigning to make compensation fair, proportionate and affordable. This includes addressing excessive legal costs and radical reform of the civil litigation system.

To find out about our Fair Compensation Campaign and the other legal reforms we propose, visit: www.themdu.com/about-mdu/fair-compensation. We encourage dental professionals to get involved and make their voice heard.

For more information visit www.theddu.com.

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