If I change insurers, will I lose my tail cover? Retroactive cover explained

A number of doctors have mentioned that they worry about changing medical indemnity insurers 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.

Retroactive cover is a feature of ‘claims made’ insurance policies. All medical indemnity insurance policies in Australia are ‘claims made’ policies (see our Medical Indemnity Insurance: The Basics blog post which explains ‘claims made’ policies).

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.

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. This is the first time Dr B became aware that there was an issue with the surgery.

Dr B notifies her insurer on risk on 15 March 2018 of the possible claim by the patient. (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).

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 on Dr B’s policy is on or before 1 October 2016 (that is, on or before the date of the surgery), Dr B will be covered for the claim. But 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.

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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’.

At Tego, our Medical Practitioners Professional Indemnity policy provides unlimited retroactive cover. So, if you switch your medical indemnity insurance to Tego, getting the right retroactive date will no longer be a risk.

If you have any questions, please feel free to contact me.

This publication is general in nature and is not comprehensive or constitute legal or medical advice. You should seek legal, medical or other professional advice before relying on any content, and practice proper clinical decision making with regard to individual circumstances. Persons implementing any recommendations contained in this publication must exercise their own independent skill or judgment or seek appropriate professional advice relevant to their own particular practice. Compliance with any recommendations will not in any way guarantee discharge of the duty of care owed to patients and others coming into contact with the health professional or practice. Tego Insurance Pty Ltd is not responsible to you or anyone else for any loss su­ffered in connection with the use of this information.