Medical Professional Indemnity 101

What is medical professional indemnity?

Medical professional indemnity, also known as medical malpractice insurance, provides legal and financial support to healthcare professionals where they have been negligent in their conduct or are accused of this.

Why is medical professional indemnity important?

As in other parts of the world, the frequency of claims, as well as the associated amount of demands have escalated sharply in South Africa since the start of the millennium.  Many factors have contributed to this, including amongst others, patients’ increased awareness of their constitutional rights, lack of social security and meaningful government support for those with disabilities, commoditisation of healthcare with the media fuelling unrealistic patient expectations, and contingency-based law firms focusing on different potential revenue streams following amendments to Road Accident Fund legislation. Whereas in the private sector many claims can be defended successfully, legal defence costs alone can rapidly add up to large sums of money. Where monetary settlements are indicated to compensate patients for harms suffered as a result of negligence, these amounts can easily exceed R10 million.  

Many different factors can contribute towards a claim against a doctor being lodged, including diagnostic errors, delayed diagnoses, incorrect treatment prescribed, inadequate informed consent, known and unexpected surgical complications, as well as unsatisfactory communications and administrative mishaps.

What type of cover is available?

Surprisingly, many healthcare practitioners do not understand the distinction between the common forms of insurance cover and, as a result, they do not understand which cover they enjoy, or which cover is the most suitable for their needs. In a 2020 survey commissioned by EthiQal, to non-policy holders, 72% of surveyed specialists admitted to not knowing the differences between occurrence-based and claims-made cover.

Occurrence-based cover

This gold-standard and most popular type of cover provides protection for claims that result from any incident that occurs whilst being a policyholder, irrespective of when the claim is made. This includes the time after a policy has been cancelled, for example for reasons of retirement, emigration or career change.  

Claims-made cover

This cheaper type of cover provides protection for claims that result from any incident that occurs whilst being a policyholder, but only if the claim of malpractice is also notified to the insurer during the same period of cover. Thus, if cover ends, any claims made after the end date will not be covered by the policy. This is important, as claims may be made against a practitioner many years after the treatment, especially if children are involved.

Whereas so-called run-off (or extended reporting period) cover may be purchased to cover former when discontinuing a policy, this can be very expensive.  An insurer may also be unwilling to provide such run-off cover at all, taking into consideration a doctor’s risk profile, leaving the practitioner in a vulnerable situation.

What are the benefits of being covered by EthiQal?

  • Most competitively priced occurrence-based cover in South Africa
  • Only South African insurer to provide occurrence-based cover.  

The importance being indemnified by an organisation like EthiQal, underwritten by Constantia Insurance Company Limited ( a registered Financial Services Provider (FSP) in South Africa),  includes legal protection in terms of South African laws and regulations and financial oversight by regulatory authorities to ensure a fund’s solvency:

  • Cover is defined in terms of a contract that is legally binding and enforceable. This contrasts with medical defence organisations that may not be licensed as a Financial Services Provider (FSP) in South Africa and offer cover on a discretionary basis according to their memorandum and articles of association. Where a dispute relating to cover should ensue between a practitioner and indemnifier, only a foreign country’s courts or arbitration panel could potentially adjudicate and rule on this where such indemnifier is located offshore. This contrasts with disputes that may involve a South African insurer where policyholders are fully protected in terms of South African laws and regulations, including the insurance principle of Treating Customers Fairly (TCF) and easy access to the industry Ombudsman.  
    • Contrary to financial organisations not registered as FSPs in South Africa, EthiQal operates in a highly regulated market and submits regular reports to the Prudential Authority to demonstrate that reserves suffice for the defence and settlement of future claims. This is similar to the medical aid industry where the Council for Medical Schemes monitors the reserves of medical aid schemes and implements corrective actions in the event of a scheme’s solvency being threatened.  
  • Individualised risk management support through practice visits and engagements.
  • Expert claim support and assistance from an experienced in house clinical and legal team and leading external l firms.
  • Easy access to skilled and knowledgeable local staff.
  • Collaboration with, engagement and support of professional societies with a view to lobbying for appropriate industry solutions, facilitating peer review, prioritising solutions as a result of data-sharing and analysis and designing innovative risk management solutions.
  • Strong reinsurance support via Lloyds of London.

To protect yourself and your practice, speak to EthiQal about finding the right professional indemnity cover for your needs and at the best price.