Dawn of a new age of indemnity

indemnityKevin Culliney takes a look at the indemnity provisions reform and discusses what we can expect from this.

Recently, Sajid Javid announced government proposals to reform indemnity provisions in 2022.

This decision coincides with recommendations from the Paterson inquiry, number 10 of which states:

‘We recommend that the government should, as a matter of urgency, reform the current regulation of indemnity products for healthcare professionals in light of the serious shortcomings identified by the inquiry and introduce a nationwide safety net to ensure patients are not disadvantaged.’

Here, we look at this reform and discuss what it means for dental indemnity.


Ian Paterson was a breast surgeon working for the NHS and at Spire hospitals.

In 2017, Ian Paterson was convicted of 17 counts of wounding with intent and three counts of unlawful wounding. 

Paterson’s indemnifier exercised its discretion not to indemnify the surgeon and avoided paying over £40 million in damages.

Had Paterson been indemnified by an insurance company, the insurer would have also declined cover, as insurance indemnity does not cover deliberate or criminal acts.

Given the severity of the case and the number of patients involved, the government instituted a formal inquiry that delivered its report in February 2020.

It recommended that an investigation into the whole issue of indemnity provision should take place. As well as procedures put in place to ensure that future patients would not be left exposed.

In 2019, the Department of Health conducted a consultation on the future of indemnity. The results were expected in 2020, but have been delayed due to Covid-19.

Following the Secretary of State’s statement, we can now expect reform; but what might this look like?

The future of indemnity

Post-Paterson inquiry, discretionary indemnity will likely become a thing of the past.

This change will bring the dental defence organisations (DDOs) under the regulation of the Financial Conduct Authority, which will have cost implications.

The chancellor will impose 12% insurance premium tax; as anyone working in the insurance industry knows, regulation is expensive.

We expect it to add an additional 6-8% to the DDO’s cost.

Fortunately, clinicians will then have contractual certainty of cover and well-regulated insurance with a right to recourse if unhappy, and DDO’s converting to insurance companies will create certainty around solvency.

What can we expect from reform?

A criminal clinician, or one who forgets to renew their indemnity, can leave an injured patient without compensation.

Elsewhere, a dentist may find him or herself uninsurable by a run of claims.

They may require some supervision or retraining. However, should they exclude doctors and dentists when there is a shortage? Densura’s answer is a form of risk pool that all indemnity insurers fund. 

So what?

Change is coming. Cost is a factor, but opportunities may appeal to new market entrants.

A regulated environment will create price competition, driving up the level of service.

There is a new future for medical indemnity.

Look out for detail over the coming months and seek advice from those leading the change.  

For more information visit densura.com.

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