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Why doctors need a Professional Liability Insurance

M3 India Newsdesk Mar 14, 2018

Today we get a financial planning expert to throw light on professional liability insurance for doctors in India and the merits if any. 







To err is human, to forgive is divine…well, may not be true when it comes to Doctor-patient relationship in this day and age!

Traditionally, the profession of a doctor was considered only next to God and we hardly saw any instance where an Indian doctor was accused of negligence, forget the death of a patient and held guilty and punished for it. However, it’s no longer the same, thanks to the growing consumer awareness coupled with the Social Media revolution.

The traditional doctor-patient relationship is undergoing a change with one of a Consumer and a Service Provider/Consultant.

Recent press reports suggest that there has been a significant upward rise in the number of cases handled by the Consumer courts and various Tribunals with regard to medical negligence and alleged malpractices by the Professionals who are supposed to be in the "noblest" profession. They are being questioned and challenged by the common man who completely depends on their skills and blindly trusts them. Doctors and Hospitals are also being held accountable for their actions with repercussions that can prove to be extremely trying both professionally and financially, a case in point can be a recent example of AMRI hospitals of Kolkata, wherein the hospital had to compensate to the tune of Rs 1.7 crore on account of damages for the death of a visiting NRI more than 14 years ago in a case of medical negligence.


The Current Norm

The irony is, Doctors, when it comes to their own personal finance, tend to look at solutions which have a higher perceived value and not go by the basic principle they themselves follow in their own profession, i.e. Diagnosis first before prescribing the medicine as per symptoms. Usually, the decision to buy a financial product is taken with a herd mentality or due to peer pressure, largely due to lack of time to dive deep into the subject and over-reliance on the insurance agent or the financial product seller who claims to take care of your investments but in reality, maybe only looking to  reach his targets and increase his sales and commissions.

A well studied and thought through strategy is lacking.

So how does one safeguard one's own interest while trying his level best to provide the best medicare to their patients?

Liability Insurance for Professionals is the solution for Doctors who can protect themselves against an untoward incidence of being sued for Professional Negligence/Malpractice.

Doctors and Hospitals can protect their business interests against legal claims for error, omissions, professional neglect for both the principles and their employees.

The policy covers all amounts which the Doctor/Hospital becomes legally liable to pay as damages to a third party (Patient/Patient’s Relatives) in respect of any error and/or omission on his/her part committed whilst providing professional service. Legal cost and expenses incurred in defense of the case, with the prior consent of the insurance company, are also covered, subject to the overall limit of indemnity selected.
Only civil liability claims are covered. Any liability arising out of any criminal act or act committed in violation of any law or ordinance is not covered.

Under the Professional Indemnity Policy, the sum insured is known as Limit of Indemnity. This limit is fixed per accident and per policy period which is called Any One Accident (AOA) limit and Any One Year (AOY) limit respectively. The AOA limit, which is the maximum amount payable for each accident, is to be fixed taking into account the nature of the activity of the Doctor, e.g. Physician or a Surgeon and the maximum number of people who could be affected and maximum property damage that could occur, in the worst possible accident.

The Premium of a Professional Indemnity Insurance usually take into account the sum assured, a profile of the Doctor, quantum of revenue generated in a steady manner, location and risk involved. Overall, the cost of the cover is generally around 0.3%-1% (approximately) of the total sum insured.

The overall penetration of non-life Insurance in India is a meager 0.72%. This itself speaks volumes about the ignorance of buying Professional Liability Insurance in India.

Disclaimer-The information and views set out in this article are those of the author(s) and do not necessarily reflect the official opinion of M3 India. Neither M3 India nor any person acting on their behalf may be held responsible for the use which may be made of the information contained therein.

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