According to a survey conducted in 2016 by the National Law University, Bengaluru, there has been an alarming rise of 400% in cases related to medical negligence filed in consumer courts. Therefore, the need for doctors to be financially and legally insured is gaining momentum, so that they can protect themselves if they are sued for mistakes, negligence, or malpractice.
The reasons cited for the rise in the number of cases of medical negligence, as per the Maharashtra Association of Resident Doctors (MARD), which surveyed 1200 resident physicians, are as follows:
- Only 10-15% cases are genuine, with doctors being found guilty.
- 30% cases are due to the patients’ expectations not being met, after paying high medical expenses.
- 20% cases are caused by patient anxiety and limited understanding of the technical details of the case.
- 15% are cases of error or negligence. Out of these, the majority of cases are due to improper consent from relatives before performing certain medical procedures, switching hospitals, or inadequate documentation of diagnosis and treatment.
What is Professional Indemnity or PI insurance? How does it help doctors?
Professional indemnity is an insurance plan to financially safeguard medical practitioners against legal costs and claims for compensation by patients in case of a legal suit. Legally, it is a protection from liabilities for physical and financial damages caused during the course of treatment. At times, the amount is quantified based on the mental trauma and stress that the course of events has caused to the patients. In such cases, patients’ expectation of monetary compensation is huge.
Due to the rise in litigation, doctors should apply for indemnity insurance every year. Senior surgeons are estimated to pay around 10% of their annual income towards premium of PI insurance. The premium for indemnity insurance is usually around 0.3% – 1% of the sum insured.
Coverage under PI Policy
Mostly, professional indemnity policies offer protection against and cover for:
- Extent of financial damage or loss to the victim which is not a result of willful neglect
- Unintentional errors and omissions
- Insurance extended to other qualified employees, unqualified employees, and partners in the same practice
- Cost of defending oneself in the court of law
Compensation from insurance company, concept of AOY: AOA
The policy will pay the sum insured that was set as a limit for a particular cover. For example, if the sum insured is Rs. 5,00,000, then it will be the maximum amount that the insurance company will pay in case a claim arises. In case a claim for Rs. 6,00,000 is submitted to the insurer, the insurer will pay only Rs. 5, 00,000 and the difference amount of Rs. 1,00,000 has to be borne by the practitioner. The cover that needs to be taken has to be decided based on the factors such as the risk involved in practice, and the probability of occurrence of events which may lead to litigation.
The sum insured is referred to as Limit of Indemnity and is fixed as ‘per accident’ and ‘per policy period’, also referred to as Any One Accident (AOA) limit and Any One Year (AOY) limit. The ratio of AOA and AOY limit needs to be chosen while taking a policy and it is the deciding factor for the amount payable for each accident or incident of negligence.
The types of AOY and AOA ratios offered depend on the insurance company. The AOY: AOA ratio usually ranges from 1:1 to 1:4, where the period of policy i.e. 1 year, is constant and the number of incidents in a year varies from one to four.
Here’s an example to explain this concept better. Consider a doctor who has indemnity cover for Rs. 50,00,000 and has a policy with an AOY-AOA ratio of 1:2. In case he is liable to pay Rs. 30,00,000 as compensation for a lost case, the company will only pay Rs. 25,00,000, since the policy has to cover two accidents in a year. Thus, the practitioner will still have a cover of the remaining Rs. 25,00,000 for another accident during the same period.
Professional indemnity may not cover claims arising from the following aspects of a practice:
- Medical treatment given for weight loss, plastic surgery, genetic diseases, and conditions associated with AIDS
- Criminal acts, penalties, fines, punitive and personal damages
- Intentional non-compliance, willful neglect, or deliberate act of inflicting injury to the patient
- Loss of goodwill
- Medical practice done under the influence of alcohol or narcotics
There is an increasing awareness among patients regarding their rights. A strong likelihood of garnering sympathy from the judicial system is one of the reasons for the rise in the number of lawsuits against medical practitioners. It is therefore important for doctors to have an insurance cover that takes care of the legal and financial risks of operating a medical practice.
Bajaj Finserv offers indemnity insurance for doctors up to Rs. 2 crore, with attractive premiums and hassle-free claim processing. Doctors have a wide range of cover options to choose from and can avail benefits from various features of the insurance policies, such as claims arising from loss of documents, unintentional breach of confidentiality, and more.