Dr Cunningham, a board member of not-for-profit Medicus, said its fees were about two-thirds of those of the United Kingdom-based Medical Protection Society (MPS), plus the money would not go offshore.
A former member of the MPS New Zealand advisory panel, Dr Cunningham said there had been a feeling the panel's "governance role" in New Zealand had "diminished".
Concerns did not relate to decisions about coverage or individual cases.
New Zealand had an unusual medico-legal environment, with little litigation, but a variety of avenues through which medical complaints were dealt with.
It made sense to set up a New Zealand service rather than relying on an offshore mutual society for medico-legal counselling and indemnity cover.
Most of those involved with the new provider had been closely associated with MPS, so brought a good level of experience.
Subscriptions for district health board doctors were reimbursed or paid by their employer, so the taxpayer stood to benefit from cheaper fees.
Medicus has teamed up with insurance broker Aon to provide the scheme.
Southern District Health Board funding and finance general manager Robert Mackway-Jones said the board spent $181,000 for Otago doctors' MPS fees in 2009-10.
Southland's figure was unavailable but was probably about half that of Otago, he said.
Mr Mackway-Jones suggested doctors should study deals carefully to ensure coverage was the same if they were considering a switch.
Association of Salaried Medical Specialists executive director Ian Powell also sounded a note of caution, telling clinicians in an email newsletter Medicus was the "new boy on the block" with no track record.
He urged clinicians not to consider cost savings, as DHBs were obliged to foot the bill for their subscription and could not pressure employees to sign with a cheaper provider.
"On the basis that MPS has always provided very good service to our members, our advice is that you should not make the change unless you are confident that Medicus will offer you both a demonstrably better product and better service."
He acknowledged MPS was a longstanding sponsor of the association's conference dinner.
MPS New Zealand head of medical services Dr Brendon Gray said MPS welcomed the competition.
He pointed out MPS was also not-for-profit, with 120 years' experience worldwide and more than 50 years in New Zealand.
Not being an insurance company - nor having the backing of one - was an advantage, as MPS was not bound by financial caps, terms or conditions, or small print, he said.
"We have the flexibility of discretion, which we have used many times to help doctors in difficult, unusual and unforeseen circumstances - those that are unlikely to be covered by a contract of insurance."
