Most people who provide professional services and/or advice to the general public take out a form of insurance cover that protects them and their clients against adverse incidents that may lead to injury and/or some kind of financial loss. Civil engineers, for example, take out professional indemnity cover against the possibility that the structures that they build will become unsafe and may cause injury to people. Doctors take out medical indemnity cover against the possibility that they may injure their patients during the course of a medical procedure or perhaps as the result of a prescribed course of treatment.
Usually, professional indemnity cover is sold in the form of a contract between an insurer and the professional person, where the terms and conditions of the cover are detailed in the contract. The amount of money that the professional person pays to the insurer to maintain the agreed amount of cover for a given period (usually one year) is called the premium. The amount of money paid as a premium is determined largely by the amount of risk that the insurer carries on behalf of the professional person. Generally speaking, the higher the risk, the higher the premium.
In some professions, it is a condition of registration that some level of professional indemnity cover is in place at all times. This requirement varies greatly between professions and sometimes between states and territories. For medical practitioners, most states and territories now require that medical indemnity cover is in place before registration is allowed. For privately practising midwives, it is not currently a requirement in most jurisdictions to have professional indemnity cover in place before registration is granted. However, this situation is expected to change under the proposed new National Registration and Accreditation Scheme.
In 2002–03, Australia faced a medical indemnity crisis, with large increases to insurance premiums causing some doctors to consider leaving the profession or ceasing to practise in high-risk areas. The government intervened by passing legislation to stabilise the medical indemnity industry, which was characterised by ‘captive’ insurers that were owned by medical defence organisations. The government also took action to subsidise premiums paid by doctors practising in higher risk areas, including obstetrics, to ensure affordability of professional indemnity cover and the continued provision of the full range of medical services for the community.
The Medical Indemnity Act 2002 and the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003 brought a more robust prudential structure to the Australian medical indemnity industry and tighter regulation of the indemnity products that were able to be sold. For example, cover had to be provided as a contract that described, in specific terms, which incidents were to be included. Obstetrics was one specialty that generally attracted a very high premium because of the relatively high incidence of claims and the potential for those claims to reach very high amounts in terms of payments for damages. The Government’s suite of programs included the Premium Support Scheme, which provided financial relief to specialists such as obstetricians so that their premium costs relative to other specialties became more affordable.
Most midwives in Australia are employed by a hospital (public or private) or medical practice and do not currently need to hold their own professional indemnity insurance. Their professional liability tends to be covered by the insurance arrangements for the relevant health care institution, supervising private medical practitioner or private medical practice. Each state and territory government has arrangements through their respective Treasury Managed Funds (TMFs) for vicarious liability of all staff employed in their public hospitals, including midwives.
In the mid- to late 1990s, an indemnity product was available to Australian privately practising midwives through a provider of professional indemnity insurance, but this is no longer offered. Currently, privately practising midwives who provide birthing services independently of a medical practitioner are unable to access professional indemnity cover as no insurers are currently willing to offer suitable products for the full range of maternity services. It is difficult for insurers to come up with a suitable premium for midwives because the provision of birthing services by privately practising midwives is perceived to be a high-risk activity. No adequate and reliable data is available to develop an accurate risk profile for privately practising midwives who provide birthing services. Accordingly, midwives operating privately in Australia who wish to provide the full range of maternity services are currently not able to do so with the protection of professional indemnity cover.
What the Review Team Heard
- The lack of midwife access to professional indemnity insurance cover was raised, both in submissions and during the forums. Many consumers and midwives who participated in the Review reported that they chose to proceed despite the absence of indemnity cover.
Currently there is no indemnity insurance available for midwives to access at all. To protect myself and my family, I have had to make sure that I own nothing, I choose clients very carefully and the clients have to sign a contract and disclaimer. I find this distasteful as I feel that all families should have access to funds to cover injury during the birth process. 117
- Contributors to the Review also highlighted the risks for other practitioners in a collaborative model if midwives do not have comparable insurance protection for catastrophic events.
We need to avoid a situation where any proposed reforms impact on the indemnity premiums of the existing medical indemnity premiums (particularly obstetricians and anaesthetists) by increasing the quantity of ‘fire brigade’ or ‘emergency response’ obstetrics in the system. This would arise when doctors are called in at the last minute for an obstetric complication without any prior engagement in assessment or management of the patient. 118
- Some insurers commented on the very small premium pool and the high level of perceived risk. Some commented on the lack of reliable claims data for privately practising midwives, especially those involving homebirths.
- A number of submissions, as well as discussion during forums, proposed a ‘no fault’ scheme as an alternative approach to cover catastrophic risk in obstetrics.
Currently, midwives who provide support for birthing privately do so without professional indemnity insurance. This means that they do so at their own financial risk or, depending on the midwife’s financial circumstances, the risk transfers to their clients should an adverse event occur, leaving a woman with no recourse to financial compensation.
A situation where a health professional operates without appropriate professional indemnity cover is not considered acceptable.
Additionally, lack of professional indemnity cover for midwives is a barrier to the development of collaborative models of maternity care involving privately practising midwives. It is clear that other health professionals are concerned about the potential transfer of risk to them, should an adverse event occur in a collaborative team model. In such circumstances, legal claims may be more likely to be brought against the health professional who has the means of settling any successful claim.
Furthermore, the issue of professional indemnity cover for midwives is an issue associated with registration, with most states and territories having professional indemnity insurance requirements for the registration of health practitioners.119 This issue is currently being highlighted by the introduction of the National Registration and Accreditation Scheme from 1 July 2010. The Scheme will create a single national registration and accreditation system for ten health professions, including midwives. A proposal currently under consideration would require all health practitioners covered by the Scheme, including midwives, to have professional indemnity insurance cover at all times as a condition of registration.120
The Review Team concluded that:
- Lack of professional indemnity insurance will inhibit the expansion of collaborative models of midwifery care.
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