(See here for an explanation.)
QUESTION: When is an insurer not an insurer?
ANSWER: When it is the Medical Defence Union (MDU) or a copycat version of it. (See Link)
Medical practitioners are obliged (for self and patient protection) to have professional indemnity insurance.
An insurer (usually an insurance company) is an entity contractually bound to indemnify the insured in the event of a loss or claim arising within the risk insured against. Building insurance and motor insurance policies are common examples.
Professional indemnity insurance indemnifies the insured professional against claims arising from alleged negligence of the professional in the practice of the profession. Doctors, lawyers, architects or engineers all need insurance of this type.
Confusion, it might be thought, would not surround such an issue, but in the case of the Medical Defence Union, it does.
It offers membership to doctors for a year. That may or may not be renewed. ( See Link )
Medical practitioner members are not contractually entitled to indemnity from the MDU; they are offered the benefit of the serious consideration of the MDU to extend an indemnity. That is, MDU will not lightly refuse an indemnity. If it does indemnify, it will behave just like an insurer, but if not, not. (See Link)
The Irish Department of Health, on hearing of allegations of a lapse from high standards of corporate governance by MDU (the chief executive was in receipt of a higher salary than that of which the non-executive directors were aware), suggested in a letter to MDU that it might withdraw recognition of MDU as an insurer of general practitioners in the Department’s Medical Card Scheme. Of course a body such as MDU is in the absolute control of the directors/executive and not the members, given the contingency of membership.
The Department informed the press that it had sent a copy of its letter to the financial regulators of Ireland and the UK.
The Department, as appears from the report in the Irish Times on 19th September 2006, knows the “indemnity” offered by MDU is at the discretion of MDU.
The financial regulators have no regulatory role over an entity such as MDU.
The Department is in dispute with the MDU, as the MDU retreats from the Irish medical market. MDU will no longer “cover” members in Ireland; the Irish Government will become the indemnifier of the doctors. However, rather than just declining to take new members or continue membership for Irish doctors, MDU, having taken “membership fees” for many years has declined to indemnify some members for “historical claims”.
Which prompts the question; why is the Department of Health, even yet, treating membership of MDU as equivalent to a policy of insurance?
A doctor and his/her patient must have certainty that, in the event of a claim of negligence, given the very high legal costs in establishing the fault or otherwise of the doctor, it cannot be left in doubt that an indemnity will be forthcoming for the claim and the costs associated with it. (See Link )