Last week marked the first anniversary of the Code of Practice for Medical Defence Organisations (MDOs) in the UK. When this voluntary code came into effect on January 6, 2025, it was heralded as a new framework for fairness, transparency, and member care.

As we reflect on the last 12 months, it is only right to acknowledge the progress. The commitment to publishing a "Fair treatment of members" policy and the establishment of an Independent Complaints Review Service (ICRS) are positive steps. They provide a structure for governance that was previously opaque.

However, I look at risk through the lens of certainty. While the Code improves how MDOs communicate and handle complaints, it fundamentally fails to address the elephant in the room: Discretion.

The core issue with the MDO model has always been that indemnity is discretionary, not contractual. The Code of Practice explicitly reinforces this.

Under Principle No. 4 (Decision Making), the Code states clearly: "Notwithstanding the provisions of this Code, the Code does not - and cannot - fetter the exercise of discretion."

This is the crux of the security issue. An MDO can follow every procedure in the Code perfectly, ensuring due process, robust governance, and timely communication and still decline to assist you. The Code regulates the process of the decision, not the outcome.

In the world of commercial insurance, a policy is a legally enforceable contract. If you meet the terms, the insurer must pay. In the MDO world, even with this Code, you are reliant on a "request for assistance" rather than a claim on a policy.

Financial Transparency vs. Solvency Capital

The Code also introduced a "Financial Attestation" principle, requiring MDOs to confirm their funding position in their annual reports. While they commit to showing "longer-term funding adequacy", this is self-governed transparency.

Compare this to the regulated commercial insurance market (London Market & Lloyd's of London), which is subject to rigorous statutory capital requirements (Solvency II). Commercial insurers don't just "attest" to adequacy; they are legally required to hold capital reserves to guarantee they can pay claims.

The Choice: MDO vs. Commercial Insurer

So, why does the market remain split?

Why remain with an MDO?

• Tradition & Solidarity: Many practitioners value the mutual model and the feeling of being part of a professional brotherhood since 1885.
• Occurrence-Based Cover: Historically, MDOs offered occurrence-based cover (protection forever for work done during membership) as standard, though many commercial insurers now match this.
• The "Soft" Benefits: MDOs often provide excellent medico-legal advice and support for disciplinary matters that sit outside strict negligence claims.

Why move to a Commercial Insurer?

• Contractual Certainty: You hold a contract. The insurer cannot arbitrarily exercise discretion to decline a valid claim. You have enforceable rights.
• Regulation: You are protected by the Financial Conduct Authority (FCA) and the Financial Ombudsman Service in a way that goes beyond a voluntary code.
• Security: In an era of skyrocketing claims costs, the financial backing of Lloyd's of London offers a tier of security that a mutual fund simply cannot replicate structurally.

Conclusion

The Code of Practice is a welcome evolution. It ensures that if an MDO says "no," they must now tell you why and give you a route to complain about it.

But for a healthcare professional, the ultimate question is not "Will they explain why they won't help me?" but rather "Are they legally obliged to help me?"

As long as the answer to the second question is "No," the security gap remains. The Code polices the discretion, but it does not remove it. For those seeking guaranteed protection, the move to contractual insurance remains the only way to secure peace of mind.