At least 17 NHS trusts are considering opting out of the national risk pool for clinical negligence claims, HSJ has learned.

  • Insurance firm in talks with 17 trusts about quitting national litigation risk pool
  • Trusts want quicker settlement of cases to reduce costs
  • “No evidence” that insurers can do better, says NHS Litigation Authority

The providers, mainly in the North West, are in talks with global insurance firm Lockton about buying cover on the commercial market, the broker’s senior vice president Mark Riley-Pitt has said.

Every NHS trust in England is a member of the clinical negligence scheme managed by the NHS Litigation Authority.

Mr Riley-Pitt told HSJ the providers must give notice by the end of August if they are to exit the scheme in 2016-17.

He said the trusts have become frustrated at the time it takes to settle claims within the scheme. He said commercial insurers could reduce costs by handling cases more quickly.

A finance director at one of the trusts said: “Some trusts have seen their contributions go up by 50 per cent, so you can conclude that an organisation would start to look at alternatives.

“Commercial insurers are indicating that they will be able to reduce the time it takes to deal with cases, and the associated costs, and are able to demonstrate that in other health economies.

“There’s also something about the competition in the market driving down costs.”

According to data published by the authority, contributions to the scheme fell short of the overall damages and costs incurred in 2013-14.

Contributions totalled £968m - an increase of 38 per cent since 2009-10 - while the total costs were more than £1bn - an increase of 59 per cent. The number of claims almost doubled over the same period to more than 10,000.

Although national data has not yet been published for 2015-16, a number of trusts have reported steep increases in their premiums due to changes to the way they are calculated.

Mr Riley-Pitt said: “People are genuinely frustrated with the current system. It’s not just about the money for some of them; they want to take back control of their claims and deal with them proactively. We are one of the few countries in the world where hospitals don’t buy insurance independently.

“For every year a claim isn’t dealt with the costs increase by 10 per cent, and we deal with claims very early, recognising where avoidable harm occurs and dealing with it straightaway.”

He claimed the authority, which had estimated future liabilities of £23bn in 2014-15, does not have the resources to manage claims to the same extent as a commercial provider. Trusts would “have to take their liabilities with them” if they exit the scheme, he said, so withdrawal in some cases may be dependent on financial support from the Department of Health.

Lockton has spoken to 30 trusts, while a number of others are thought to have spoken to other insurers. Mr Riley-Pitt had similar discussions with providers in 2012, when he worked for a different firm, but they eventually chose to stay in the scheme.

An authority spokesman said there was “no evidence” that insurers could achieve faster and more cost effective settlements elsewhere. Its scheme ensures that money is “not tied up in reserves for future claims or diverted to insurer profits and additional costs such as insurance premium tax”, he added.

He said the state backed scheme also “removes the uncertainty” that an insurer may not remain in the clinical negligence market.

The authority has “an excellent track record in resolving claims promptly”, he added, but stressed the importance of the NHS challenging cases where there is no liability, rather than settled quickly on a commercial basis.

Many of the drivers for the increasing number of claims and rising costs “lie in the legal environment”, he added, but those organisations with fewer, less costly claims have seen their contributions reduce, despite a rise in claims overall.

He said more than half of claims were resolved without payment.