Insurance premiums rise by £1m at Health this year

Thursday 05 August 2021

Insurance premiums to cover medical claims against the Government are rising by almost £1m this year, caused in part by a rise in claims locally.

And it is likely that costs will increase even further next year.

The Treasury Minister has recently signed an official order transferring money from the Government’s general reserve and reallocating other sources of funds to meet the increase in costs.

£610,000 of the money signed over to Health will meet a general increase in premiums.

£225,000 will pay for insurance in 2021 for consultants working outside of obstetrics and gynaecology, who previously bought their own indemnity cover.

Another £150,000 will meet a shortfall caused by the end of a ‘good claims history’ rebate which the Government’s insurers are no longer willing to pay. 

Explaining why premiums had increased generally, the report accompanying the minister’s decision said: “There continues to be a global increase in the cost of insurance, especially medical malpractice insurance. 

Pictured: The Government‘s medical insurance premium is increasing from £1.5m to £2.11m this year - a 40% increase.

“This is being fuelled by the increasing frequency and value of claims - locally and globally - set aside a landscape of increasing litigation in the health sector; the impact of the global pandemic and an increasing numbers of insurance companies leaving the marketplace.

“As an illustration, the Government purchases two layers of insurance cover, a primary layer up to £10m per claim and a secondary layer up to a further £20m per claim. The secondary layer insurers - a global insurance company - pulled out of the market during 2019 with one month’s notice.

“The premium is to increase in 2021 from £1.5m to £2.11m. This increase is in respect of the secondary layer insurance cover provided by two companies, Newline and Beazley.

“There is a significant likelihood, given the marketplace and increasing claims experience in some key risk areas, that the renewal for 2022 will require a further additional increase that will need addressing through the 2022 Government plan process. 

Pictured: Last year, the Government received a number of claims relating to maternity cases.

“For example, during 2020 the Government saw an increasing number of incidents and claims relating to maternity cases.”

The report goes on to explain that a major risk is that the indemnity that that the consultants outside of obstetrics and gynaecology purchase from ‘medical defence organisations’ is discretionary so could be rescinded if, for example, a consultant has a claim against them for malpractice but hasn’t complied with all relevant protocols.

This would lead the Health Minister vicariously liable for any claims.

The report goes on to say that the Government currently has a number of these claims.

“These claims have potentially significant uninsured sums attached to them which are not budgeted for within the department and therefore potentially impact the insurance fund,” it says. 

“One major multi-claimant claim could effectively wipe out the value of the insurance fund and require funding from other reserves.”

To mitigate against this, there has been “ongoing debate” within Health about bringing the consultants on the Government’s medical malpractice policy for their public work. 

The Government Plan for 2022-24 already includes the £450,000-a-year premium increase for those years but £225,000 has been signed over to cover the consultants for the rest of this year.

The end of the Government’s ‘good claims history’ rebate is due to one significant ‘business interruption claim’ that it made because of the pandemic. The insurers, the report says, have said that this bonus will not be paid again. 

It adds that the overall insurance programme is due to be re-tendered in 2022 and the rebate will be factored into that process.

Not all of the money for the insurance cost increases will come from general reserves. £136,499 held by a law firm for the Historic Abuse Redress Scheme, which is no longer needed for that, will be reallocated to help pay the insurance bills.