A number of doctors have told me that they worry about changing medical indemnity insurers. Why? Because they’re concerned that if they switch insurers, they’ll lose their retroactive (‘tail’) cover. This post demystifies retroactive cover in medical indemnity insurance policies.
What is retroactive (or ‘tail’) cover?
Retroactive cover, also known as ‘tail’ cover, is insurance cover for liability arising from medical services provided in the past.
The Medical Board of Australia requires doctors in private practice to include appropriate retroactive cover in their medical indemnity insurance for matters arising from prior practice in Australia which otherwise wouldn’t be insured. The IBNR Scheme covers most claims against medical professionals for incidents that took place on or before 30 June 2002.
Retroactive cover is a feature of ‘claims made’ insurance policies. All medical indemnity insurance policies in Australia are ‘claims made’ policies. This means a medical indemnity insurance policy is triggered when a claim against a doctor is made (or when the doctor first becomes aware of the possibility of a claim) arising from the provision of medical services, not when the doctor provides the medical services.
For example, say Dr B, an orthopaedic surgeon, operated on a patient on 1 October 2016. On 15 March 2018, Dr B receives a letter from the patient’s lawyers. The letter states that since the surgery, the patient has numbness and pain running down the side of his leg, making him unable to work. Dr B believed the patient’s surgery and recovery have gone smoothly. It was only when Dr B received the lawyers’ letter that she became aware there was an issue with the surgery.
In this situation, Dr B must notify her medical indemnity insurer on risk on 15 March 2018, not the insurer on risk at the time of the surgery in October 2016. When deciding whether Dr B is covered, one of the first things Dr B’s 2018 medical indemnity insurer will look at is the retroactive date on Dr B’s policy. If the retroactive date is on or before 1 October 2016, then Dr B’s 2018 medical indemnity insurance policy is the applicable policy.
The retroactive date
The retroactive date – which is specified in the policy schedule – is of crucial importance in assessing retroactive cover. A medical indemnity insurance policy will not cover medical services provided before the retroactive date.
Let’s return to our earlier example of Dr B. Dr B notifies her insurer on risk on 15 March 2018 of the possible claim by the patient. If the retroactive date on Dr B’s policy is after 1 October 2016 (that is, after the date of the surgery), Dr B will not be covered for the claim, leaving her uninsured. (Remember, because medical indemnity insurance is ‘claims made’, it’s the date Dr B becomes aware of the claim, not the date of the incident, that is relevant for assessing insurance cover).
Of course, no doctor wants to be left uninsured. At the same time, doctors have certain legal obligations regarding insurance cover as part of registration standards for medical indemnity insurance: if a doctor switches medical indemnity insurers, the retroactive date on the new policy needs to be far enough in the past to cover prior activities.
So, what’s the solution?
Unlimited retroactive cover
There’s a simple solution to this problem. As long as your medical indemnity insurance policy has unlimited retroactive cover, you won’t have a gap in cover for unknown matters, even if you change insurers.
Unlimited retroactive cover means that regardless of when a doctor provides the medical services which lead to an actual or potential claim, the medical indemnity insurance policy in force when that doctor notifies the matter will be triggered.
If you’re unsure, check your policy schedule: it should say ‘unlimited’ next to the words ‘Retroactive Date’. As long as your policy has an unlimited retroactive date, switching medical indemnity insurers means you won’t lose your tail cover.
At Tego, our Medical Practitioners Professional Indemnity policy provides unlimited retroactive cover. So, if you switch your medical indemnity insurance to Tego, you can rest assured that you won’t lose your tail cover.
If you have any questions, please feel free to contact me.