Why you need indemnity insurance cover as a professional

If over 22,000 doctors practicing in Nigeria, under the Nigerian Medical Association (NMA) take Professional Indemnity Insurance as required by Section 45 of the National Health Insurance Act, 1999, the public who turn out to be victims of their errors would get adequate financial compensation.

From NMA members alone, the nation’s insurance could mop up an estimated N1.1 billion premium annually for a minimum bed space of 20, which is enough to guarantee adequate compensation in an estimated sum assured of over N200 billion. That is, 22,000 doctors paying a premium of N50,000 per annum for minimum bed space would have earned a sum assured of N200 billion.

Incidentally, this is not the case as majority of the doctors are ignorant of the provisions of the law, while the public also do not know they could make claims on medical practitioners error in the course of treatment, so the insurance companies that are legally responsibly to undertake this risk are also short changed as 90 percent of the doctors do not take the insurance. This is in spite of the fact professional Indemnity Insurance is compulsory under the law and requires that medical practitioners take the insurance against liability damage in the course of duty.

The reason has been due to lack of adequate legal framework to implement the law; usual compromise by government enforcement agencies and lack of awareness on the part of victims.

Professional Indemnity Insurance also called professional Liability Insurance but more commonly known as errors & omissions (E&O) in the US, is a form of liability insurance that helps protect professional advice- and service-providing individuals and companies from bearing the full cost of defending against a negligence claim made by a client, and damages awarded in such a civil lawsuit.

The coverage focuses on alleged failure to perform on the part of, financial loss caused by, and error or omission in the service or product sold by the policyholder. Professional liability coverage sometimes also provides for the defense costs, including when legal action turns out to be groundless.

Mayowa Adeduro, managing director, Anchor Insurance Limited had said the biggest challenge facing implementation of PII is lack of enforcement mechanism.

Adeduro said that government agencies who should insist that these medical doctors or other service providers take the compulsory insurance as precondition for renewal of their annual operation license most a time compromise and these things are taken for granted.

“Government should insist that these practitioners place at strategic position in their offices certificate of compliance indicating that they have taking their liability insurance for the current year, or face sanctions. If this can be possible, you will see that it will no longer be taken for granted and it will be in the interests of the public and the insurance industry, Adeduro said.

Michael Odutola, a broker said the importance of insurance to professionals cannot be over emphasised because it becomes a fallback position in case of the unexpected.

He said the purpose of professional indemnity policy is to protect the professional man against his legal liability and to pay for damages to the persons who have sustained loss arising from his own professional negligence or that of his employees in the conduct of the business. Are you are professional adviser or give service as a lawyer, architect, medical doctor, dentist ,etc , then you need Professional Indemnity Insurance cover.

The Nigeria the National Health Insurance Scheme – (NHIS  of 1999) requires every healthcare professional  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 licence 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.

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.