Starting in Private Practice Discount

Starting in Private Practice Discount

Medical Indemnity Insurance

Starting in private practice discount

Most doctors in Australia, when they first start working in private practice, are able to access what is commonly referred to as a “starting in private practice discount”. This is a tiered discount that usually runs over 4 or 5 years. In the first year of private practice, the price paid is typically discounted by, say 80%. And then the discount may fall to 65% in the second year and by 15% per annum thereafter. Each insurer has a different approach and different scales.

But it does mean that your premiums will jump by a large percentage amount each year because, not only is the scale unwinding, but your annual billings may be rising also as your practice grows. And you also accumulate more past years of work which means your “retroactive risk of claim” will increase.

The prices that each of the six national medical indemnity insurers for doctors will charge can vary widely across each insurer based on a range of factors. And the features can also differ from insurer to insurer. And some insurers claim to offer better service or support than others.

How are your premiums calculated

Premiums are generally assessed by the doctor’s state of practice, specialisation, claims history and billings band.

Importantly, not all medical indemnity insurers adopt the same pricing approach and some will specifically assess your premium in accordance with your individual risk profile including actual gross private billings and sub-specialty areas.  Some insurers will also require you to report any increase in income during a policy period (particularly those that adopt a billing band method) and reserve the right to seek additional premium retrospectively.

Some insurers offer significant discounts to reward compliance with certain accreditation standards or to assist doctors who are new to private practice.

Given the differences in premiums and policies, you should contact us, and our expert team can offer independent advice as to which product is best for you. If you find an insurer that better suits your needs it is possible to switch and we can advise you on this also.

Why do insurers offer a starting in private practice discount?

Being new to private practice means your tail exposure is shorter, and with various insurers this means you pay a lower premium. Your base premium is individually calculated to reflect your practice as it changes over time including:

  • Your practice mix across different sub-specialty areas
  • Your actual billings for the current and prior year
  • Your estimated gross private billings for the next twelve months

Each year your annual premium will be calculated to reflect the increasing tail exposure and changes to your practice.

It is important to remember that if your actual billings end up being higher than your estimate, some insurers may apply mid-term or retrospective premium increases, where others may not.

Contact HDL to discuss how we can assist you

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The information provided in this article is of a general nature only and has been prepared without taking into account your individual objectives, financial situation or needs. If you require advice that is tailored to your specific business or individual circumstances, please contact HDL.  The discount image used is for illustrative purposes as provided by MIGA, other insurers have different models that they apply.

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