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Professional Indemnity
Monday, November 1, 2010
Take one a day.....

Regulations published on the 30th August 2010 under the Health Professions Act require health practitioners, to obtain professional indemnity insurance. This cover insurance must be obtained from an insurer registered under the Short-term Insurance Act.

Such practitioners include doctors, specialists, dentists and psychologists practicing for their own account, whether in partnership, association or by way of a company allowed for in the Health Professions Act. The requirement does not extend to those practitioners employed, for example, by the State at provincial hospitals. That is presumably on the basis that the State is liable for the negligent conduct of those professionals and has the financial means to meet any judgment.
Notes Donald Dinnie of Deneys Reitz, “Medical practitioners have not previously been required such insurance for medical malpractice claims. And it is not surprising that patients obtaining judgment against doctors for medical malpractice have found the practitioner to be uninsured and without any funds to meet a judgment.”
So much for the good news – but there are problems with the regulations.
He says the extent of the insurance cover required is not stipulated. Even cover of R10 000 per event would be inadequate. “Yet, on the face of the regulation, a medical practitioner who obtains professional indemnity cover of just R1.00 would have complied with the regulation. Such rules are also silent on what would be considered adequate cover taken together. For example, where an obstetrician obtains cover for an exposure of say R10m for any claim that is well and good, but will be of a limited benefit where there are two or three such claims.” The aggregate should therefore not be limited to the amount of a single claim. A greater annual aggregate of all possible claims is needed.
“The question also arises whether the cover must be taken out for claims made during the insured period. Nor is provision made for any run-off cover. For example, a doctor will comply with a regulation where at all times while practicing the doctor had maintained a professional indemnity insurance policy in place but immediately the practitioner retires, the policy ceases. Cover is therefore needed for all claims that arose during the practitioner’s working life during which the professional indemnity cover was maintained,” comments Dinnie.
Because of the general three-year prescription period and a longer period (up to 19 years) when the patient is a minor, a claim may only be made against the practitioner well after retirement or when the practitioner had ceased to practise medicine and embarked on another career.
“These issues should have been dealt with,” observes Dinnie.
Where a practitioner has indemnity cover from an entity other than a short-term insurer, for example, through membership of a recognised society or organisation such as a medical protection society, then that society or organisation has to register as an insurer under the Short-term Insurance Act within four months of 30th August 2010. That four month registration period is clearly too short and extensions may have to be granted.
The regulations are promulgated under a section of the Health Professions Act, which allows the Minister of Health to determine conditions under which a practitioner may practice, after consultation with the Health Professions Council. It is presumed that the appropriate consultations were held and that the effect of requiring indemnity cover to be obtained only via a registered insurer was duly considered. But was this attempt to force medical protection societies to register as insurers subject to proper consultation?
“Practitioners with an independent practice who currently have indemnity cover via membership of a recognised society or organisation will have a four-month period of grace within which to obtain insurance through a registered insurer. That may involve the relevant society or organisation obtaining the appropriate registration, alternatively, the mounting of any successful challenge by the relevant society or organisation to the regulations or insuring for limited losses only.”

Copyright © Insurance Times and Investments® Vol:23.11 1st November, 2010
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