Professional Indemnity insurance to be compulsory?

By: Mawuli Zogbenu


Commissioner for Insurance, Ghana and former President, NCRIB, Laide Osijo at the just concluded WAICA even in Lagos.

“Until recently, it is pardonable to say that the one who goes for the water breaks the pot, sometimes” — Author

In recent times, medical professionals especially have had the bashing of sections of the public for some negligence at some medical facilities that have resulted in deaths and permanent total disability of some patients. In some of these instances, threats of legal suits among others reared their ugly heads.

Indeed, medical practitioners, like all other professionals, undertake to uphold the highest standards of professionalism in pursuant of their professional obligations.

Most countries have medical negligence law, also referred to as medical malpractice law, which provides compensation to patients in the event of any harm arising from sub-standard medical treatment. While a doctor, health care professional or hospital may not be directly liable for the harm a patient might suffer while in their care, they are, however, legally responsible for harm to patients that arises directly from their negligence of deviation from the standard care required of them.
Who is a professional?
Apart from medical doctors, conventionally, people like lawyers, engineers, architects were regarded as the only ‘professionals’. However, the increase in the demand for essential services like the provision of news, overtime, has broadened the scope of professionals to encompass persons who offer specialist advice or services in journalism, photography and others.
In line with their duties, professionals are often exposed to various perils, which may not only undermine their competences, but also cause them financial and other losses. For instance, Dr Conrad Murray, a Cardiologist, was accused of administering an overdose of propofol on the late Pop Star, Michael Jackson, in 2009, and consequently convicted for manslaughter in 2011. Notwithstanding his release after serving two out of his four-year sentence, Dr Murray’s reputation has undoubtedly been badly bruised.
It is quite regular to have professionals faulted in the course of their professional conducts. For instance, while a lawyer may be badmouthed for his/her poor handling of a suit, a journalist may be cited for libel, and a doctor not spared the accusations of wrong diagnostics and surgeries.
This even extends to musicians who after collecting part payment fail to turn up for scheduled shows and also contractors who have either turned in substandard jobs or failed to deliver on time. Indeed, recently, a Ghanaian contractor friend rejected an offer for civil works from a famous American-based church on the bases that the slightest negligence resulting in variations against agreed specifications might demand that his firm rebuilt the whole structure at his (the contractor’s) cost.
This, therefore, brings to the fore the need for Professional Indemnity (PI) insurance, to provide the necessary cover against such professional negligence.
Customers’ expectations
Undoubtedly, organisations’ reputation for professionalism engenders public trust. Very often, a professional’s reputation is only as good as his/her last job delivered. While true professionals always strive to deliver the best service, the human element, undoubtedly, has its own toll on this.
This is, however, not a subtle endorsement of mediocrity, except to say every professional is bound to make a mistake or two at one point. Thus, even the best surgeon may perform a bad surgery, if he/she was in a rather bad mood prior to the performance of the surgery.
Professional Indemnity (PI) Insurance
Pl insurance provides cover for individual professionals and companies against a claim, usually a civil suit, arising from professional negligence. The policy typically covers alleged failure of performance, financial loss, and service/product error or omission by a policyholder. The cover sometimes extends to the cost of defense and groundless lawsuit. In some jurisdictions, PI is by law required of, especially, medical and legal professionals.
Types of PI
Typically there are three types of Professional Indemnity insurance:
1. Negligent act, error or omission
This is the narrowest form of cover which indemnifies the policyholder against loss/circumstances incurred only as a result of their negligent act, error or omission in carrying out their business.
2. Breach of duty
Provides indemnity against loss arising from any claim or claims for breach of duty, that is, by reason of neglect, error or omissions committed in the conduct of the insured professional’s business, depending on the policy wordings.
3. Civil liability
Beyond the standard coverage, some PI policies extend the policy coverage to any ‘civil liability’ including breach of contract, libel and slander. When a PI claim is repudiated, for instance, the insurer is required to arrange for a legal representation and/or expert witnesses, on behalf of the client; hence legal and investigations costs are often covered.
Exclusions on PI policies
Generally, a PI policy will not cover criminal prosecution and liabilities under civil law that are not enumerated in the policy. They may, however, be subject to other forms of insurance.
• Contractual liability that is not caused by negligence
This occurs when a professional signs up to a contract which might impose a liability going beyond acceptable legal limits. This includes liquidated damages like late delivery penalties and unforeseeable economic loss (e.g. business interruption). Insurers must, therefore, ensure a great deal of flexibility and take cognisance of the demands of the different groups of professionals and their respective contractual liabilities.
PI may be high risk
Lately, most Ghanaians have awakened to their rights to legal redress against negligent journalists, medical doctors and other professionals. For instance, there has been an upsurge in libel suits against some ‘errant’ journalists, often resulting in huge fines. In this regard, many insurers in our part of the world appear uncomfortable underwriting PI policies, since the risks involved are usually very high. That notwithstanding, it is imperative for insurers to consider the track records of individual professionals before offering them PI cover. There is also the need for all qualified professionals to have in place Professional Indemnity insurance before practising. While at this, can our Legislature begin the process of making Professional Indemnity insurance compulsory?
Until next week, “This is insurance from the eyes of my mind.”
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