Headlines: August 24th, 1998

The Government has announced plans to get rid of one of the more wasteful
aspects of the internal market in the NHS. It is allowing the NHS to pool its
resources over insurance.

Until now each NHS Trust has made its own arrangements over insurance. A
survey carried out by the NHS Executive during January and April showed that
Trusts spend in the region of 55million pounds a year on premiums and receive
only between 10 – 11million pounds against those premiums.

Health Minister Alan Milburn. “Before the reforms of the previous Government,
the NHS was one big family and carried its own risks. Now, each NHS Trust has to make its own arrangements. Most NHS Trusts resort to commercial insurance because they fear the cost of a major claim, although these are rare.”

“There can be no more absurd example of the wasteful consequences of the NHS internal market than these huge sums which individual NHS Trusts pay out every year on insurance premiums.”

Ministers have accepted that commercial insurance should be replaced by a risk
pooling scheme, set up under Section 21 of the NHS and Community Care Act 1990.

A risk pooling scheme for non – clinical liabilities, similar to that which
already exists for clinical negligence, will help keep NHS costs down and –
equally importantly – will encourage improvements in risk management across the NHS.

Mr Milburn has asked the NHS Litigation Authority to start looking at ways of
adapting their operation to embrace the new scheme. Discussions with the
Association of British Insurers will continue but Ministers are resolved on the
new scheme as the way forward. Significant progress in getting the new scheme
up and running should be possible by April of next year.