How much do you know about Locum Insurance?
Written by Anmol Paul, Specialist Locum Insurance Adviser
Locum Insurance may seem complicated but the benefits can be crucial to a busy practice. Similar to Practice Expenses Insurance, this Guide explains the areas to consider, highlighting key considerations and explaining common pitfalls.
Assessing the risk – pre-existing conditions
Traditionally, Locum insurance policies were fully medically underwritten, with any pre-existing conditions permanently excluded from cover. This has obvious benefits to the insurer in protecting them from likely claims, but it can also result in an isolated event prejudicing an otherwise insurable condition. For example, a pregnant woman consulting her doctor because of back pain may actually have any future back conditions excluded, whether she is pregnant or not.
Assessing the risk – absence-based plans
A much more user-friendly method of assessing risk has been developed, which ignores pre-existing conditions, unless they have caused continuous absence for more than five or 10 days in the 12 or 24 months prior to inception. Moreover, any condition excluded because of absence is considered for re-inclusion after a symptom-free period of 12 months.
These absence-based plans have proved very popular, enabling many with longstanding, pre-existing conditions to receive full cover. Over time, however, their lack of restriction has put pressure on insurers to increase premiums to compensate for the amount they have had to pay in claims.
Best of both worlds
This has resulted in a hybrid underwriting method, based on absence but with additional information collected on pre-existing conditions, with a view to more cautious underwriting when appropriate, in return for maintaining premiums at a reasonable level.
All these underwriting methods require the completion of a proposal form, based on which the insurer will advise the basis on which they will offer cover, clearly communicating any exclusion(s) at the outset.
A less satisfactory method of offering cover used by some insurers is based on a statement of fact, where it is assumed certain statements hold true (for example not having any pre-existing conditions).
Beware statement of facts
Whilst this method has the superficially attractive benefit of not needing to complete a proposal form or answer any questions, you don’t know if something is excluded or not until a claim. It requires reading the policy wording in fine detail to fully understand when the policy will respond or not.
A final note concerns age: some plans charge more, the older customers get. Others, however, are not rated on age and as a consequence are considerably less expensive in the long term.
Indemnified or Benefit-driven
Some Locum policies require you to provide receipts of the cover hired to make a claim – known as an Indemnified policy. If a Locum or temporary replacement is not available when needed, a practice receives no bill and therefore can claim no reimbursement.
Conversely, receipts are not always necessary to claim Benefit policies. This means a practice is able to, for example, use the money to compensate a colleague who works overtime to provide cover.
The Devil is in the Detail
Superficially, one Locum policy can seem just like any other. Skimming the features and benefits, most would appear to provide similar cover, but the nuances can mean many thousands of pounds is at stake.
For example, some insurers don’t treat stress like other illnesses but impose a longer deferred period and/or restrict the number of weeks for which benefit may be claimed. They may even insist, before approving a stress claim, that the claimant has to consult with the insurer’s specialist.
These tactics obviously reduce the cost of this unfortunately common condition to the insurer, suggesting lower premiums. However, when you consider that the average insured weekly benefit is now around £2,500, what may have appeared to be a cheap policy suddenly proves to be very expensive.
Something else to look out for is an insurer implying that an event or condition is covered but also imposing a condition that effectively prevents a claim being made. A good example of this is compassionate leave. An insurer may impose the customer’s chosen deferred period (usually four weeks) on compassionate claims. This defeats the whole purpose of compassionate leave, which is invariably triggered by a sudden, unexpected traumatic life event, not easy to give an employer four weeks notice. Make sure, therefore, that a policy pays compassionate leave from day one.
Review your cover
The cost of Locum Insurance is not static so make sure to review your cover annually. Be wary of paying more than required, as well as under-insuring. This is the difference between the sum declared to represent the weekly benefit amount and the actual benefit amount claimed for. If your practice is under-insured, even in partial losses, the practice may be deemed to be carrying some of the risk itself and the insurer will require the practice to pay a portion of the claim, which can prove expensive, particularly in the event of a long claim.
The benefits of specialist knowledge
A good way to get the most appropriate cover is to use a specialist provider like MIAB to explain policies in a clear, simple way to help you make an informed decision.
For example, we provide simple comparison documents between our plans and those of our competitors, quoted verbatim from their policy wordings, helping to save you considerable time when choosing a policy.