Surge In Litigation Risk Drives Demand For Indemnity Insurance By Doctors; Why They Think It Is Essential

Amidst the rising risk of litigation, doctors are buying professional indemnity insurance, data shows. In the last five years, demand for such insurance has spiked by almost 150 times.

India is witnessing an alarming rise in medical negligence cases filed against hospitals and medical professionals in consumer courts. Moreover, heavy compensation ranging from Rs 1 crore to Rs 11 crore has been ordered in some of these cases in the past.

While the latest data is unavailable, according to a 2016 survey by the National Law University, Bengaluru, there has been a 400% increase in claims linked to medical negligence submitted in consumer courts. Although only 10 to 15% of instances were legitimate, with physicians being convicted, the remaining 85% of medical workers were allowed to defend themselves.

Following the trend in the past five years, the data from an online platform for insurance purchase, PolicyBazaar shows an increase in the uptake of professional indemnity insurance by Indian doctors, especially amid the rising risk of litigation.

According to PolicyBazaar, the majority of the bookings are done by dentists, physicians, surgeons, radiologists and anesthesiologists.

Starting on a small base, the company claims to have noticed a huge surge in the sales of professional indemnity insurance by the medical community.

“In the past five years, we have significantly boosted our insurance policy sales and premium collections. We started in the financial year 2020, we saw a growth in demand by 800-900% (as we had run awareness campaigns) and our business grew by close to 300%,” Sajja Praveen Chowdary, head, PolicyBazaar for Business told News18 while talking about professional indemnity insurance.

“Last financial year, we saw a growth of 65% in premiums. Our insurance products have resonated particularly well with healthcare professionals, notably dentists, physicians, surgeons, radiologists, and anesthesiologists, who account for 90% of our bookings,” he said.

In absolute numbers, data shows that in the financial year 2019-20, the company sold 111 policies which swelled to 1,300 in FY 2020-21 followed by 3,200 next fiscal year 2021-22. In FY 2022-23, 8,300 policies were sold and in FY 2023-24, 16,500 policies were sold.

What is This Insurance Cover?

The amount a doctor can be sued for can be extremely high. Thus, there is a need for special insurance to safeguard doctors both financially and legally against claims of negligence.

Experts explain that professional indemnity insurance is designed to financially protect medical practitioners from legal costs and compensation claims made by patients in case of a legal dispute. Indemnity refers to a specific contractual obligation where one party compensates another for incurred losses.

The purpose of professional indemnity insurance is to cover the financial damages resulting from unintentional errors and omissions by doctors, insured qualified and nonqualified employees, and staff. It also covers the costs of legal defence in court. However, it does not cover criminal actions and does not protect or compensate doctors against physical assault.

Such Policy is Our Need, Not A Choice: Doctors Told News18

According to medical professionals, professional indemnity insurance is a necessity rather than a choice.

“This is not only because the cases of litigation against doctors are rising, but also because huge sums of compensation have been ordered by the courts in a few cases,” Hyderabad-based neurologist Dr Sudhir Kumar told News18. He referred Anuradha Saha’s case from Kolkata where the court ordered a compensation of Rs 5.96 crore in which the interest crossed Rs 11 crore.

Saha, who lived in Ohio and was visiting Kolkata, developed rashes and fever. While being treated, her condition worsened and eventually, she died. In this case, the compensation was high because the victim was an NRI. The court assessed her loss of income in dollars and converted it to rupees, using an exchange rate of Rs 55 per dollar.

“Having professional indemnity insurance provides peace of mind to the doctors, and they can focus well on providing the best care to their patients,” Kumar said while adding that at his hospital (Apollo Hospitals, Hyderabad) professional indemnity insurance is mandatory for all doctors. “We need to do it on our own, and the amount insured also depends on individual doctors.”

Similar views were echoed by other doctors. Dr Maninder Dhaliwal, an expert in paediatric pulmonology, believes that as patients are becoming aware of their rights, safety, information, redressal and litigation process, doctors are now more aware and taking professional indemnity in the right spirit.

“I have had professional indemnity insurance since the beginning of my pediatric consultancy. Though never used it, it’s like any other insurance. It’s like a safety net, giving us mental peace and financial security, though it can never cover for reputation loss.”

He believes that professional indemnity should be made compulsory by our medical bodies for all doctors. “All physicians in the United States are required to obtain medical malpractice insurance (MMI) to practice. Additionally, during the MBBS training, we should incorporate and stress more about professional indemnity into MBBS teachings too.”

Dhaliwal, who works at Faridabad-based Amrita Hospital, has devised a formula to avoid medico-legal issues.

“Follow these 5Cs in daily practice,” he said while listing the checklist, consent, counselling, complication management, and coverage by insurance. “These all 5Cs to be followed by the most important D, that is documentation.”

Reflecting the same concerns, Dr Yatin Mehta, chairman, critical care, at Gurugram-based super speciality hospital Medanta, said he would suggest all doctors to have this insurance. “There is no doubt that at times, doctors are being harassed under the garb of negligence or error. It takes no time for a patient’s family to hold a doctor responsible even for their negligence or delay in treatment.”

“And then, consumer courts hold doctors responsible even when there is no substantial proof. In such scenarios, there is no option but to prepare yourself in advance against such frivolous complaints and cases.”