Makinde, a 45 year old man was brought in unconscious into a private hospital in the suburb area of Ikorodu in Lagos State, after he collapsed in the bathroom while taking his bath. Four hours after later, he died with an allegation that the hospital did not give him adequate attention because his family could not make the requested deposit. Now a group of angry mob led by the deceased immediate family was said to have stormed the hospital claiming for damage and compensation from the owner of the hospital. The owner of the hospital who was not present at the time of the incident agreed that the staff on duty could have done what they did base on experience with some patients.
“Most a times, people bring in patients into the hospital and will never show up again, and at the end the hospital bears the cost. They have brought unconscious patients with mental problem and after we have resuscitated such patients we discover that they were just picked from the street and brought to us. At the end we were left mental deranged patient who do not even know where they came from and so we have always bear the cost”.
Though the doctor (Owner of the hospital) knows that it was circumstantial, he however accepted it was error by his staff on duty at the time of the incident. He accepted to make compensation to the deceased family and also cost of burial, all from the hospital purse.
If they doctor and staff on duty had ‘professional indemnity insurance’, the compensation and cost of burial would have been taken care of by the insurance company that provided the cover.
If you provide a professional service or give advice as a healthcare, medical officer, then you need Professional Indemnity Insurance cover. In Nigeria, the National Health Insurance Scheme–(NHIS of 1999) requires every healthcare professional to have insurance that will protect their patients in case of accidents or fatalities (death) resulting from professional negligence. This type of insurance provides compensation to patients and their relatives in the event of involuntary murder, disability, shock and injury suffered by patients as a result of the negligence of Health Care Providers. The penalty for non-compliance with this law is a possible revocation of license by the National Health Insurance Council, a record of conviction, and sealing-off of the premises.
What is professional indemnity insurance?
Professional Indemnity Insurance protects you from claims if your client holds you responsible for errors, or the failure of your work to perform as promised in your contract.
Who is a professional?
Anyone who gives to another person advice and/or services of a skilful character according to an established discipline might be regarded as a ‘Professional’. That means persons other than those in ‘traditional’ Professions, such as doctors and lawyers, Engineers, Surveyors , Insurance Brokers , Accountants are now considered to be Professionals i.e. Computer consultants, advertising agents, and fund managers.
Why does a professional need a professional indemnity policy?
A Professional will hold himself or herself out as having a special skill, which can be relied upon by another. Consequently the law requires that the Professional exercise the required skill to an appropriate level expected by that profession. Professionals are only human and mistakes do happen. Any financial loss, injury or damage arising from a mistake or failure by the Professional to exercise the required level of skill may mean that an award is made in favour of a person who suffers a loss, damage or injury. A Professional may also be held to be liable for a mistake even though there was no negligence.
What protection will a professional indemnity policy provide?
A Professional Indemnity insurance policy aims to shield the professional’s assets in the event of a claim therefore ensuring that he/she is able to carry on their business
What is the date of inception?
The Inception date is the date of the start of the Policy Period.
What is the retroactive date?
When the policy provided is written on a claims-made basis as is done with Professional Indemnity, prior acts become an important consideration. If an Insurer is not willing to provide coverage for previous, unknown events that may have occurred prior to the policy inception, the tool used to limit this exposure is the “retroactive date” limitation.
If a policy is written with an effective date of 1st January, 2017 for a business that has been trading since the year 2010 without a retroactive date, the policy is activated for any incident that is reported during the policy period ie after the 1st January, 2017, regardless of when the incident occurred. Adding a retro date to the policy is comparable to building a fire wall. When the insurer adds a retroactive date to the policy that is the same as the inception date of the policy, the policy will respond only to claims that are reported during the policy period if they occurred after the policy was written ie. in the case above, only errors committed after the 1st January, 2013 would be covered.
A claims-made policy that does not have a retroactive date or an unlimited retroactive cover is better for the insured because there are no restrictions on when the wrongful act must have occurred. For coverage to apply, the claim must be made after the policy inception, regardless of when the incident occurred. Such a policy still does not cover incidents that are known at policy inception and could give rise to a claim in the future. These must be disclosed on the application and are not covered.
A contract without a retroactive date is advantageous to the insured from a coverage standpoint and, as a result, the insured can expect to pay more for the coverage. Most professional liability contracts do include a retroactive date. When a client cannot obtain unlimited retroactive coverage, the retroactive date should be set as far back as possible.
When does a wrongful act take place?
Few professional liability insurance policies provide a definition for arriving at the exact time at which a wrongful act takes place. However, according to custom and practice, the wrongful act is generally considered to have taken place when the professional service that ultimately causes the loss or damage is actually performed or should have been performed, but was not.
Modestus Anaesoronye
