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6.6 Medical indemnity

The government’s medical indemnity framework is designed to strengthen the longer term viability and success of the medical insurance industry by indemnifying medical practitioners in certain circumstances. The schemes under the framework are:

  • the Exceptional Claims Indemnity Scheme
  • the High Cost Claims Indemnity Scheme
  • the Premium Support Scheme
  • the Run-off Cover Indemnity Scheme for doctors
  • the Incurred But Not Reported (IBNR) Indemnity Scheme
  • the Midwife Professional Indemnity Scheme.

Exceptional Claims Indemnity Scheme

Under the Exceptional Claims Indemnity Scheme, medical practitioners are protected against personal liability for eligible claims that exceed the level of their insurance cover.

In 2018–19, no claims were submitted against this scheme.

High Cost Claims Indemnity Scheme

Under the High Cost Claims Indemnity Scheme, the government funds 50 per cent of the cost of medical indemnity insurance payouts that are greater than the threshold amount, up to the limit of the medical practitioner’s insurance cover.

In 2018–19, the number of claims paid increased by 2.5 per cent compared with the previous year.

Table 34: High Cost Claims Indemnity Scheme

2016–17

2017–18

2018–19

Claims received

378

433

444

Benefits paid

$47.7 million

$58.6 million

$70.4 million

Premium Support Scheme

Under the Premium Support Scheme, eligible medical practitioners receive a subsidised reduction in their insurance premiums. Insurers are then reimbursed the subsidised amount:

  • For premium periods starting before 1 July 2012, the scheme subsidises 80 per cent of the cost of the premium beyond the 7.5 per cent threshold.
  • For premium periods starting on or after 1 July 2012 and before 1 July 2013, the scheme subsidises 70 per cent of the cost of the premium beyond the 7.5 per cent threshold.
  • For premium periods starting on or after 1 July 2013, the scheme subsidises 60 per cent of the cost of the premium beyond the 7.5 per cent threshold.

Table 35: Premium Support Scheme

2016–17

2017–18

2018–19

Eligible practitioners

1,268

985

1,004

Amount paid

$7.6 million(a)

$8.2 million

$7.2 million

Administration fees

$1.4 million

$1.4 million

$1.4 million

(a) Figure reflects recovery undertaken for a previous financial year ($120,000).

Run-off Cover Indemnity Scheme for doctors

Under the Run‑off Cover Indemnity Scheme, the government covers the cost of claims for eligible medical practitioners who have left the private medical workforce. The government uses funds received through the Run‑off Cover Support Payment to fund this scheme. The scheme allows for eligible medical practitioners to be covered for incidents connected with their practice. Indemnity cover for eligible medical practitioners reflects the last claims arrangement they had with their insurer.

In 2018–19, the number of claims paid increased 49.4 per cent compared with the previous year.

Table 36: Run‑off Cover Indemnity Scheme for medical practitioners

2016–17

2017–18

2018–19

Claims received

47

79

118

Benefits paid

$2.9 million

$4.9 million

$6.7 million

Run-off Cover Support Payment

The Run‑off Cover Support Payment is imposed as a tax on each medical indemnity insurer for each contribution year. This is used to fund eligible claims made under the scheme. Medical indemnity insurers are reimbursed for compliance costs.

In 2018–19, $1.5 million was paid in administration fees.

Incurred But Not Reported Indemnity Scheme

Under the Incurred But Not Reported (IBNR) Indemnity Scheme, the government covers the costs of claims from medical defence organisations that do not have adequate reserves to cover their liabilities. Avant Insurance Limited, previously known as United Medical Protection, is the only medical defence organisation actively participating in the scheme.

The department determines claims lodged under the scheme on their merits, and claims can often take a number of years to finalise. Therefore the amount paid under the IBNR can vary each year. Eligibility criteria under the Medical Indemnity Act 2002 require that the incident must have occurred on or before 30 June 2002.

In 2018–19, the number of claims paid increased by 60 per cent compared with the previous year.

Table 37: Incurred But Not Reported Indemnity Scheme

2016–17

2017–18

2018–19

Claims received

23

15

24

Benefits paid

$1.1 million

$0.7 million

$6.2 million