Friends or Foe

Indemnity Insurance

MLAG has been accused by Apex Insurance Consultants Limited of misguiding doctors to benefit itself. I wish to clarify that unlike Apex, MLAG is a non profit organization which is why we do not send salesmen to individual doctors to sell indemnity insurance. Our main purpose is to engage with the Government on issues which adversely effect medical profession using RTI, making representations, filing Writ Petitions and PILs and spreading knowledge on legal matters among doctors across India. Any help we give individual doctors is pro bono (without any charge). Indemnity insurance is a service being provided by MLAG to benefit its members and its actual value will be realized only once we cross the threshold number of 10,000 insured.

It is however an extremely difficult question to answer whether Indemnity Insurers are your friends or enemies. You cannot do without them, that is a given fact. However can you blindly trust them ? Will they stand by you come what may ? Only those who have had the misfortune of needing them will realize what I am saying. Care and caution are the key words when dealing with them.

Insurance companies deny liability with the most flimsy excuses and this distresses doctors who are already troubled by the case of alleged medical negligence filed against them. Problem however arises because Doctors treat their Indemnity Insurers like Medical Representatives and do not spend time understanding and filling proposal forms properly. Common mistakes made by doctors while taking indemnity insurance are;

1)Taking only Professional (Personal) Indemnity Insurance and no Error and Omission Policy for the Clinical Establishment they work in. This is specially true in clinics and small nursing homes which are proprietorship concerns. This leave them vulnerable to exploitation in case a patient slips and falls or in case a visiting consultant is involved. In these cases , the claim is made against the Hospital / clinic and not the Doctor personally and the insurers gleefully deny liability in court.

2) Another problem arises because doctors without realizing the concept of AOA; AOY take a cheaper policy which gives them coverage for any 4 accidents in any one year. Though the policy is for 50 lacs and compensation awarded is also 50 lacs, the insurance company will only pay 12.5 lacs for the one case decided against the doctor concerned since the policy is 1;4 AOA;AOY. Doctors should only take policy in ratio 1;1 even if the particular product is more costly.

3)Taking a small policy of 3 lacs by a surgeon or a gynaecologist today is equivalent to not taking a policy. No interventionist should be insured for less than one crore. This should ideally be split into 2 policies of 30 lacs and 70 lacs with the same company, because those sitting on the bench become generous when they come across an insurance policy of crores and faced with a “victim” who has suffered a loss irrespective of the fact that the insured doctor has been negligent or not.

4)Not informing the insurers of an incident which may result in a claim later. An incident where sudden death occurs in OT and violence occurs, resulting in an FIR being lodged or a legal notice from a lawyer may be received , all need to be reported to the indemnity insurers even though when you contact them you will be told telephonically that role of Insurance Company will come into play only once the case reaches consumer court . Send information regarding the incident with supporting documents and copy of your insurance to the Company for their information and needful.

5)Not taking cover for unqualified attendants working in your clinical establishment. 7.5 percent loading does not work out to be more than a few hundred rupees only and trying to save this at the time of taking policy costs exponentially more later once a case is filed in court. Errors. Made by supporting staff does not absolve doctors of their liability under the concept of vicarious liability,

6)Another problem is that doctors in Government Hospitals and Institutions feel that the problem does not concern them and so they do not take indemnity insurance. This may have been true 30 years ago but today it is crystal clear that doctors working in Government Hospitals, Tertiary Institutes, ESI Hospitals, Primary Health Centers, civil hospitals and even Army Hospitals require Indemnity Insurance. Basically any Doctor working in a hospital which charges money for few services from some patients and provides free services to others is covered within the purview of Consumer Protection Act and being in Practice without Indemnity Insurance is “Negligence per se”. A lapsed policy can be revived but only with care and caution involving your agents / Association.

7) Not getting Retroactive date entered in the policy document causes problems when the policy is ported from one vendor to another and a problem occurs. The indemnity insurance in Inda is “Claim” made based policies and not “event” based policies. This means that an insurer has the leeway to deny liability if the claim is made 1 year later but event had occurred within the policy period insured by them. Even Insurers themselves poorly understand this concept as also their agents. Apex insurers recently accused MLAG of scare mongering and claimed there is nothing like claim made based policy vs an event based policy. Someday I plan to invite their legal team to our MLAG Annual Conference for a debate on the subject. It is however very hilariously illuminating that the very existence of a basic concept like this needs debate to convince someone like Apex Insurance who provides Indemnity Insurance to 60,000 plus doctors. I will answer this question with evidence in all my talks henceforth in all conferences I am invited to speak at.

8)Not filling proposal form properly. Ramkinker Hospital and Ramkinker Research Institute are different entities for Insurance purposes. However Doctors tend to sign the proposal form, negotiate the premium and leave the actual filling of proposal form to the agents who represent insurance companies. They fill up whatever they see on Boards and displays outside and this may actually defeat the whole purpose of insurance in case an actual claim arises.

9)Ideally it is better that policy is taken as a group so that the group has negotiating power with the insurers. It is however necessary that those leading the group should be well aware of the nitty gritty and falacies of insurance so they can get the best deal for their members. Simple issue like interim payment of 50 percent as is being demanded by consumer courts before accepting appeal under CPA 2019 are routinely refused by insurance companies claiming that they will settle only after final award is made by consumer courts. Problems like this as also regarding appointment of lawyers are all easy to take care of if a association or organization of doctors like MLAG / AMC / IMA / FOGSI are made intermediaries. Similarly interest awarded by courts is denied if the indemnity cover is exhausted. Interest is awarded by courts for the reason that compensation was due to the complainant at the time he filed complaint and not 10 years later when decision is given by courts. It is assumed that the doctors have had advantage of raking in the interest on the compensation amount all these years and hence should pay compensation. Unfortunately what is not realized and will someday be contested by MLAG in courts is that if payment had to be made at time of filling complaint it was the insurer who had to pay. So if anyone has benefited from the interest accrued over time the courts have taken to decide the complaint, it is the insurers. Hence even if the limit of insurance is exhausted, the interest component should be paid by the insurers.

10) Settlement without a compensation award by court is an issue which is mentioned in all insurance policies but is rarely implemented. A policy taken through a medical association or organization like MLAG gives benefit in such matters when negotiating with the insurers. MLAG however currently provides indemnity insurance to about 800 doctors and this number is very small and does not give us sufficient clout to deal with insurance companies strictly. Most Medical Associations make an agreement with a private insurance agent like Securenow / Coveryou / Apex / Docland and others and let them carry on their business. This is also not desirable unless premium payments are made by the association through its account. The individual policies taken by members on recommendations of their society / association or organization may be better than individual policies taken by them directly from insurance companies but are no match on policies taken by a medical organization for its members. So many times doctors forget to pay the premium in time and MLAG through its escrow account gets the policy renewed to prevent lapse.

11) The most important reason why a doctor should take a proper and valid indemnity insurance is the discrepancy between what we charge our patients in India and hence our earnings / savings vs the enormous amounts which are routinely awarded as compensations by the courts. Simply put, we cannot afford to pay the compensations in crores awarded by the courts from our pockets even if we wanted to.

Dr Neeraj Nagpal
Managing Trustee,Medicos Legal Action Group (MLAG)
Ex President IMA Chandigarh
Director Hope Gastrointestinal Diagnostic Clinic,
SCO 1066-67 Aerodale Market, New Sunny Enclave Sector 123 Mohali 140301
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