Block insurance programs seem bad for the therapists in the event of membership issues.

[SuperFizz]

I was recently looking at my insurance options on the assumption that when something looks to good to be true, it probably is. After all I couldn't understand how the APA could be selling a public sector physio a $20million insurance policy for $34. Of course I assume a lot of the real cost is hidden in their membership fee but it does beg to ask the question: 'what's the deal is if that individuals membership is cancelled by someone not themselves'?

Reading the small print on the insurance policy I noticed that the named Insured is shown as the Australia Physiotherapy Association, with the member noted in another section as an 'Insured Member:'. So I assume this means the APA has a master policy and they as a group are insured, and as a member I can have cover under that.

This worried me a little so I began thinking about scenarios where my insurance might not hold up, what if hypothetically (but always a real possibility in this litigious world) I was involved in a claim that also resulted in some sort of disciplinary action by the APA/AHPRA/Physio Registration Board. And what if the results of that disciplinary panel meant that APA then terminated my membership. Both scenarios I suppose have happened in the past so I think this is a reasonable concept.

Now what would happen to my insurance if the above scenario actually happened? I would no longer be an APA member so I don't have access to the APA's block insurance. In this case would the broker still continue to insure me? Would they do so at their normal, non-member market rates? Would they charge me a lot more knowing that they would be my only insurance option? Would I still be entitled to the reinstatement of limits as set out against claims subject to me still paying my premiums?

If the answers to the above were NO (not a member anymore therefore cover ceases) then it is unlikely any other PI insurer would take on my risk (due to a claims history and a recent disciplinary action). I have known of this happening for something as simple as someone starting a relationship with a patient in the past. After that at least one insurer would not insure them as they had been put on a 12 month supervised probation. No insurance means under the law I cannot practice in Australia any more. I suppose if the individual wasn't kicked out of the membership then they would be forced to stay for the insurance, even though they might disagree with the outcome and want to leave. Not great freedom of choice for the therapist involved.

I see the above as a real consideration under the new insurance structure. Maybe there will be clarification on the above from the APA but I think everyone would want to have in writing that if they ceased to become a member at the decision of the APA (not the individual) that they would still have access to the insurance reinstatement of limits subject to them continuing to pay the standard market premiums of the existing insurance provider. Without these people could be left with no access to malpractice cover at all.

Food for thought. I am sticking with my Physiosure policy for peace of mind.

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[physiognome]

Nice one. I actually thought the same thing and emailed the APA for clarification a few days ago now. As yet they have not responded. Don't know if that means they are trying to work out how to respond? I'll let everyone know anything I hear back on this issue. I have APA membership which actually includes the insurance as there is no option not to have it. But I also maintain my physiosure policy as they have been stable with the one company, CGU since they started. I think that and their extras is a good reason to choose them. I think APA should give a much bigger membership discount if you don't want to have their insurance included.

[physiognome]

Just a small update. The APA emailed the following. They did not respond as yet to the question of what happens to my insurance if the APA cancels my membership for any reason. I have replied posing that specific question again for comment.

Your membership package for 2014 includes both membership and insurance. It cannot be divided up to membership and insurance separately. As you have elected to pay your 2014 Membership Insurance on instalments, you have agreed to the instalment declaration to pay the full annual amount for 2014. Your membership insurance cannot be cancelled until 31st December 2014 unless under extraordinary circumstances.

[SuperFizz]

Thanks physiognome for the update. So they lock you in to the membership and insurance package for 12 months with little chance of cancelling. Another way to get people on board and keep them there. All sounds a little big brother to me. I wonder if you want to just cancel the insurance part for other membership options if you can or if you are also locked into 12 months?

[physiobob]

Thanks guys for your input. I too have been looking at this and investigating things a little. I see a block insurance program as something that cannot be compared to an individual insurance policy. In an individual policy, where the physio is named as 'The Insured', the underwriter is providing a unique policy for that person. They are reinsuring the risk of that policy being activated in the result of a claim. I know that Physiosure does this for every single one of their policies so that if there were many claims all at the same time it would not affect their business and therefore their customers security.

In a block program it seems that the company getting the block is making a call on the risk exposure for their group as a whole i.e. the likelihood of a claim/s in say any 12 month period. They might then offer a level of cover to individuals based on that ability to pay. The actual 'reality' of this perceived level of cover is more likely their ability to pay that amount based on the maximum number of claims in their risk analysis for that period. A shortfall in that financial reserve could lead to insolvency if the number of claims are more than that in their risk analysis. I suppose the APA would then need to use member funds to cover the loss but if the loss was even more than the fund available then they too might become insolvent or bankrupt.

The whole thing seems like a 'to good to be true' scenario. I think the insurers know it is a way for them to make some cash on high volumes and if big claims are made then they walk away from the business leaving the group to find a replacement (not so easy if a large claims history exists). For my 2 cents worth it is a very precarious position for the APA to get themselves into and is one that members who value their APA should vito. Why risk it all for an insurer to make some $$. But then saving even $10 seems to be very much the Aussie way. Bah! Humbug!

[physiobob]

Update to my thoughts on the above. I also remember the APA being in a dire financial position not that long ago. If they were to fall into an insolvent position that would probably affect their insurance as an insurer would not be insuring an insolvent company. As they are the insured on their policies that might mean that their members are no longer covered. It was interesting to see in an ad in their recent member magazine that 'Why members are asking why their product is so cheap!' I looked at the reasons and none related to why the product should be so cheap. Again it leads me to feel that old 'if it sounds to good to be true....'

We also know that the IHGroup when they came into the physio PI market, they did so with a policy that was not up to the level offered by the others in the market place. e.g. defense costs came out of the sum insured etc. I can see that the IHGroup use a 'middle man', being ProRisk, which is not an Insurer but an underwriting agency on behalf of certain underwriters at Lloyds of London. The APA relationship is with the IHGroup and not a direct one with Lloyds of London but via the ProRisk middleman. In that respect I am not sure where ProRisk would handle Aussie claims, would that be in Australia or if they have to be referred to/handled from the UK, which would not be ideal.

Seems more and more that Physiosure, AON or Guild are a better bet. In fact I have also learnt that the APA did not ask at least one of those three businesses to tender for their business which in itself seems a little dodgy!?