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What is medical and professional indemnity insurance?
Medical and professional indemnity insurance is a specialised form of cover that provides surety to private medical practitioners, eligible privately practicing midwives, and their patents in the event of an adverse incident caused by the practitioner’s negligence. Affordable and stable indemnity insurance translates to stable fees for patients, and allows the medical workforce to focus on the delivery of high quality services.
Overview of the Indemnity Insurance Fund
The Indemnity Insurance Fund (the Fund) is an Australian Government initiative to consolidate funds that provide Government support for medical indemnity for eligible private medical practitioners and eligible privately practicing midwives.
Broadly, the Fund’s primary objective is to streamline the administration of existing Government schemes with the following priorities:
- Promote stability of the medical indemnity insurance market;
- Keep premiums affordable for doctors in private medical practice; and
- Ensure availability of professional indemnity insurance for eligible privately practicing midwives.
The Department of Health is responsible for the policy development, oversight and governance of the Fund.
The Department of Human Services (DHS) administers the Fund’s schemes and is responsible for the payment and audit of funds expended under the schemes.
Either through contracts with the Commonwealth or under specific legislation, medical and midwife indemnity insurers are able to access specific administered funds provided by special appropriations for each of the Fund’s schemes by submitting applications for funding through DHS.
The Medical Indemnity Programs
The schemes under the Medical Indemnity Programs are briefly outlined below:
The Premium Support Scheme (PSS)
The PSS helps eligible doctors with the costs of their medical indemnity insurance through reductions in the level of premiums charged to them by their medical indemnity insurer.
The PSS subsidises 60% cent of indemnity costs for doctors whose premiums exceed 7.5% of their income from private practice.
Procedural GPs working in rural areas are eligible for PSS regardless of whether they meet other PSS eligibility criteria. The PSS will cover 75% of the difference between premiums for these doctors and those for non-procedural GPs in similar circumstances (i.e. same location, same income, same insurer).
The Run-Off Cover Scheme (ROCS)
The ROCS is designed to provide secure ongoing insurance for doctors who have ceased private practice because of retirement, disability, maternity leave, death, or if they discontinue working as a doctor in Australia.
Prior to the introduction of the scheme, doctors who left the private medical workforce often faced significant ongoing costs for "run-off cover", insurance for incidents which had occurred during their careers but had not yet been notified to insurers.
The Australian Government pays 100% of the costs of valid claims (including the costs of managing claims) made against eligible doctors.
The ongoing costs of the scheme are met by the ROCS Support Payment, a levy on the premium income of medical indemnity insurers.
The High Cost Claims Scheme (HCCS)
Under the HCCS, the Australian Government will reimburse medical indemnity insurers 50% of the insurance payout over $300,000 up to the limit of the practitioner's cover, for claims notified on or after 1 January 2004.
From 1 July 2018, the threshold for claims under the HCCS will be amended from $300,000 to $500,000. The new threshold will be applied to claims notified to insurers on or after 1 July 2018.
The HCCS minimises the impact that large claims may have on the ability of medical indemnity insurers to continue to provide affordable indemnity cover for doctors.
The Exceptional Claims Scheme (ECS)
The ECS covers health practitioners for 100% of the cost of private practice claims that are above the limit of their medical indemnity insurance (generally $20 million), so that they are not personally liable for exceptionally high claims. These claims can be either a single very large claim or an aggregate of claims related to an incident that together exceed a threshold for a contract's limit.
Health practitioners are not required to make a contribution towards the ECS. It is fully funded by the Government.
The Incurred-But-Not-Reported Indemnity (IBNR) Scheme
The IBNR Scheme covers 100% of claims made against medical professionals arising from incidents that took place on or before 30 June 2002, provided they held incident-occurring based cover with a participating Medical Defence Organisation (MDO).
The IBNR Scheme is designed to fund claims where the MDO does not have adequate reserves to cover its liabilities.
Professional indemnity insurance for eligible midwives in private practice
The Midwife Professional Indemnity Scheme (MPIS) for eligible privately practicing midwives includes:
The Level 1 Commonwealth Contribution (Claims Schemes)
Under this Scheme, the Australian Government provides financial assistance through reimbursing 80% of high value claims to the insurer that exceeds the $100,000.00 threshold up to $2 million.
The Level 2 Commonwealth Contribution (Claims Schemes)
The Australian Government will pay 100% of the cost of the claim to the insurer above the $2 million threshold.
The Midwife Professional Indemnity Run-off Cover Scheme (Midwife ROCS)
The Midwife ROCS provides secure ongoing insurance for eligible midwives who have ceased private practice because of retirement, disability, maternity leave, death or other reasons, with 100% of costs covered by the Commonwealth.