Professional Indemnity Insurance "claims made policy"

LightFlare

I am looking at ending my professional body membership in the next few months.

As part of our membership, we also have indemnity insurance included. (NHS profession)

When I asked about the process of cancelling, I received the following response:

I am obliged to inform you that the  indemnity scheme that is agreed with our underwriters is referred to as a ‘claims made policy’. This means that you must have been in membership at the time of any incident, and also when a patient submits their claim even though this may occur sometime in the future. 

 Hence, if you cease membership now and a claim is subsequently made against you, even if that the claim may refer to a period when you were practising in the past and in membership, you will not be covered.

 We have discussed your options with our insurance brokers and on advice from the underwriters; we have secured for you a further period of benefit of three years as long as you remain in membership. We therefore strongly advise that membership is retained for a minimum period of three years after ceasing to practice to facilitate dealing with a claim that may be made after retirement but arising from an incident when you were practising and in full membership.

 Further, our brokers advise that termination of membership immediately on retirement will make the processing of a claim much more difficult and our underwriters will not accept a claim arising after termination of membership.  We feel, therefore, that you should consider this advice before terminating your full membership.

The chances of any claim are virtually zero, so I am not considering the 3 years reduced rate offer (feels a bit like extortion)

Just wondering if this is a typical policy and should we have been informed that this type of policy was in place ?

Thanks

Grumpy_chap

I don't know about the medical profession, but in my profession (engineering) it is always required to have insurance for 6 years following end of trading (statute of limitations).  Some Clients write a longer period into contract.  "Run out" policies are often available for covering the period beyond trading.

DullGreyGuy

LightFlare said:

I am looking at ending my professional body membership in the next few months.

As part of our membership, we also have indemnity insurance included. (NHS profession)

When I asked about the process of cancelling, I received the following response:

I am obliged to inform you that the  indemnity scheme that is agreed with our underwriters is referred to as a ‘claims made policy’. This means that you must have been in membership at the time of any incident, and also when a patient submits their claim even though this may occur sometime in the future. 

 Hence, if you cease membership now and a claim is subsequently made against you, even if that the claim may refer to a period when you were practising in the past and in membership, you will not be covered.

 We have discussed your options with our insurance brokers and on advice from the underwriters; we have secured for you a further period of benefit of three years as long as you remain in membership. We therefore strongly advise that membership is retained for a minimum period of three years after ceasing to practice to facilitate dealing with a claim that may be made after retirement but arising from an incident when you were practising and in full membership.

 Further, our brokers advise that termination of membership immediately on retirement will make the processing of a claim much more difficult and our underwriters will not accept a claim arising after termination of membership.  We feel, therefore, that you should consider this advice before terminating your full membership.

The chances of any claim are virtually zero, so I am not considering the 3 years reduced rate offer (feels a bit like extortion)

Just wondering if this is a typical policy and should we have been informed that this type of policy was in place ?

Thanks

Professional indemnity is written on a claims made basis as standard in the UK... in other parts of the world its much more common for other classes of business too.

If you had been buying your own policy the whole time then your current insurer would likely offer you a run off policy which is a much reduced rate; I've never come across an insurer willing to do run off for a new customer though. 

Ultimately your choice if you want to run the risk or pay for insurance but it's not them buying something odd but the normal operation for this class of business.

LightFlare

Thanks both - my risk profile is extremely low so I wont be taking them up on the offer of a reduced rate for 3 years.

But nice to know its a common thing

dunstonh

LightFlare said:

Thanks both - my risk profile is extremely low so I wont be taking them up on the offer of a reduced rate for 3 years.

But nice to know its a common thing

In our industry, if you operate under a limited company you can safely end the PI insurance when you close it up.  However, self employed or partnerships calling it a day often retain run off cover for the rest of their life.    

There have been cases where the widow of a deceased individual has suffered a bill because the run-off cover wasn't in place.

Grumpy_chap

dunstonh said:

In our industry, if you operate under a limited company you can safely end the PI insurance when you close it up.  

That is not always possible as Clients will commonly write into contract that the liability transfers to a personal liability if the Owner / Director winds up the Ltd Co.  That is no different really to big corporates having parent company guarantees for subsidiaries.

LightFlare

Thanks for the responses.

Apparently the last time a claim was made against an individual was 1991 !!

So I’m just going to bite the bullet and fully cancel.
Contrary to a lot of belief, the NHS pension isn’t as gold plated as one would imagine even after 35 years - so every £ will count

dunstonh

Contrary to a lot of belief, the NHS pension isn’t as gold plated as one would imagine even after 35 years - so every £ will count

It very much is.  There are not many pensions better than the NHS pension.   However, it just goes to show that even DB pensions alone are not enough for some people.    Just think how much worse off you would have been with a DC pension paying the same amount into that.

Grumpy_chap

LightFlare said:

the NHS pension isn’t as gold plated as one would imagine 

It really, really is.
Maybe you don't know and do not feel that you can easily compare.
Here is a comparison.
My wife worked for the NHS in an admin role for 10 - 12 years or so.
I work as a Chartered Engineer and ploughing as much as permitted into pension.
My wife will be our main income provider in retirement as her pension will outstrip mine by quite a margin on current forecasts.

Smithcom

LightFlare said:

I am looking at ending my professional body membership in the next few months.

As part of our membership, we also have indemnity insurance included. (NHS profession)

When I asked about the process of cancelling, I received the following response:

I am obliged to inform you that the  indemnity scheme that is agreed with our underwriters is referred to as a ‘claims made policy’. This means that you must have been in membership at the time of any incident, and also when a patient submits their claim even though this may occur sometime in the future. 

 Hence, if you cease membership now and a claim is subsequently made against you, even if that the claim may refer to a period when you were practising in the past and in membership, you will not be covered.

 We have discussed your options with our insurance brokers and on advice from the underwriters; we have secured for you a further period of benefit of three years as long as you remain in membership. We therefore strongly advise that membership is retained for a minimum period of three years after ceasing to practice to facilitate dealing with a claim that may be made after retirement but arising from an incident when you were practising and in full membership.

 Further, our brokers advise that termination of membership immediately on retirement will make the processing of a claim much more difficult and our underwriters will not accept a claim arising after termination of membership.  We feel, therefore, that you should consider this advice before terminating your full membership.

The chances of any claim are virtually zero, so I am not considering the 3 years reduced rate offer (feels a bit like extortion)

Just wondering if this is a typical policy and should we have been informed that this type of policy was in place ?

Thanks

You've been given some pretty decent guidance on this thread.

However, it's certainly not acceptable that the insurer/broker have engaged a process that feels like extortion.  You should certainly raise a complaint regarding such extortion-like tactics.   You should consider involving the police. 

I hope that you get it sorted.  Keep safe.

All the best 

SC  

DullGreyGuy

Smithcom said:

LightFlare said:

I am looking at ending my professional body membership in the next few months.

As part of our membership, we also have indemnity insurance included. (NHS profession)

When I asked about the process of cancelling, I received the following response:

I am obliged to inform you that the  indemnity scheme that is agreed with our underwriters is referred to as a ‘claims made policy’. This means that you must have been in membership at the time of any incident, and also when a patient submits their claim even though this may occur sometime in the future. 

 Hence, if you cease membership now and a claim is subsequently made against you, even if that the claim may refer to a period when you were practising in the past and in membership, you will not be covered.

 We have discussed your options with our insurance brokers and on advice from the underwriters; we have secured for you a further period of benefit of three years as long as you remain in membership. We therefore strongly advise that membership is retained for a minimum period of three years after ceasing to practice to facilitate dealing with a claim that may be made after retirement but arising from an incident when you were practising and in full membership.

 Further, our brokers advise that termination of membership immediately on retirement will make the processing of a claim much more difficult and our underwriters will not accept a claim arising after termination of membership.  We feel, therefore, that you should consider this advice before terminating your full membership.

The chances of any claim are virtually zero, so I am not considering the 3 years reduced rate offer (feels a bit like extortion)

Just wondering if this is a typical policy and should we have been informed that this type of policy was in place ?

Thanks

You've been given some pretty decent guidance on this thread.

However, it's certainly not acceptable that the insurer/broker have engaged a process that feels like extortion.  You should certainly raise a complaint regarding such extortion-like tactics.   You should consider involving the police. 

I hope that you get it sorted.  Keep safe.

All the best 

SC  

This is not an insurer or broker @smithcom, this is a professional organisation of which one of the benefits of being part of means you are covered by their group PI insurance. 

There similarly is no extortion, it's fairly simple as all PI insurance is written on a claims made basis and so if you want cover you need to maintain a policy. The OP is free to buy their own policy or obtain cover via membership, which is likely to be much cheaper than buying their own policy. 

This happens in lots of place, a friend is a retired former senior officer of the Met and similarly the police federation have a claims made policy that covers officers against allegation of miscarriage of justice but unlike the OP there is no limitation period so if he wants cover he will be a member until he dies. At £30 a month it's not an insignificant amount but given his former rank buying a standalone policy would be 10x that. Ultimately, like the OP, he could choose to be uninsured.