Estimated read time: 11 mins
One of the main differences between the two types of
indemnity is with occurrence-based protection, your ability to
request assistance hinges on the date the incident arising from your practice
occurred. With claims-made protection, your ability to request
assistance depends on both the date of the incident and the
date when the claim or complaint is made.
So, with occurrence-based protection, you can request
assistance from any incidents arising from your practice that
occurred during your period of membership – regardless of when
the actual claim is brought. It’s feasible for a claim to be brought years
after you have left membership. You can still request assistance, as long as
the incident took place during your membership (although you should still
report any claims as soon as you become aware of them).
With claims-made protection, you can request assistance for
any claim or complaint relating to an incident arising from your
practice that occurred and is reported during your membership period. Once
your membership ends, you're not protected for any claims made against you,
even if the incident occurred when you were a member (unless you have purchased
Extended Reporting Benefits, as explained below).
In addition to being in membership when an incident
has taken place, you also need to tell your indemnifier about the incident
as soon as you become aware of it.
With claims-made protection, an extra feature is ERBs – or
Extended Reporting Benefits, which is sometimes known as tail cover. If you
retire or end your membership with your indemnifier, there is still a risk of
claims or complaints being made against you, relating to incidents that
occurred during your membership. This can happen many years after you have
ERBs are important as they enable you to 'extend' the period
of time you are eligible to request assistance after your membership has ended.
If you choose not to purchase ERBs, and you later find out about an incident
that occurred during your claims-made membership, you would not have the right
to request assistance. Purchasing ERBs offers continued protection for a fixed
period of time (dependent on the period of the ERB).
Another key difference between occurrence-based and
claims-made protection is how it is priced.
Occurrence-based protection is priced in a way that predicts
the expected cost and frequency of future claims based on the work you do in
the year in question. This also includes any claims that may come to light
after you have stopped practising.
Initially claims-made protection is charged at a lower
amount than occurrence-based protection – because in effect, you are only
paying for protection against incidents arising from your practice (and
complaints or claims reported) during those early years when you are in
membership. As the years go by, you will gradually pay more, to reflect the
greater number of years covered within your membership period.
For example, over a five-year membership period:
The subscription fees you pay in the early years are often
lower for claims-made protection than they are for occurrence-based. However,
with claims-made you may need to pay for additional protection if you leave
your indemnity provider or once you retire, so the overall cost of both types
of protection is broadly similar over the course of your career.
The costs of litigation can be ruinous, and it’s an
unfortunate fact that claims and complaints can be made against you at any
stage over a long career. Claims can be made against you when you retire and
even after you die, as these can be made against your estate for an incident
that occurred while you were practising. This is why it’s important to consider
all eventualities and make an informed choice.
See the details below for a direct comparison
between occurrence-based and claims-made protection:
Doctor A has occurrence-based indemnity and Doctor B has
claims-made indemnity. Both have been with the same provider for five years,
and have received a claim for an incident arising from their practice which
occurred in their fourth year of membership. Doctor A is able to request assistance
for the incident. Doctor B is also able to request assistance, provided that
the incident was reported at the time it occurred (that is, one year ago).
Doctor C had claims-made indemnity for 20 years and retired
five years ago. Doctor D had occurrence-based indemnity for 20 years and also
retired five years ago. Both Doctor C and Doctor D have received a claim for an
incident arising from their practice, which occurred 10 years ago (that is, 15
years into membership with their indemnity provider). Doctor D is able to
request assistance from this incident as the incident occurred whilst they were
in membership. Doctor C would only be able to request assistance for the
incident if they had purchased an ERB from their indemnity provider.
Doctor E has occurrence-based indemnity and Doctor F has
claims-made indemnity. Both started their membership with their indemnity
provider in the same year.
Year 1 of Doctor E’s indemnity is priced to predict the cost
of future claims based on their work in that year. The same is true for years
2, 3, 4, 5 and so on until retirement.
Doctor E then goes on to retire after ten years of
membership with their indemnity provider. They don’t need to continue
purchasing indemnity after they retire as their indemnity has already been
priced to take into account any claims that may come to light after Doctor E
has stopped practising.
Doctor F’s indemnity in their first year of membership is
priced to predict the cost of claims based on the likelihood of a claim being
reported in that membership year alone. For Doctor F’s second year, is priced
to predict the cost of claims arising in years 1 and 2 and will therefore
increase over time for years 3, 4, 5 and so on until retirement.
Doctor F also retires after ten years of membership and will
need to purchase additional protection in the form of ERBs to enable any
incidents arising from their practice to be reported during this period of