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Medical indemnity insurers to be required to offer universal cover


Doug Hendrie


25/09/2019 2:08:48 PM

Medical indemnity is set for a shake-up, with new rules making it compulsory for providers to offer universal cover to be introduced.

Indemnity dictionary definition
Under the new rules, insurers would be able to increase the current maximum risk surcharge to 200% of the premium, up from 100% presently.

The proposed new laws would end the situation where only the insurer of last resort in each state must offer medical indemnity.   
 
Under the new rules, insurers would be able to increase the current maximum risk surcharge to 200% of the premium, up from 100% presently.
 
This risk surcharge would be paid by doctors deemed to have engaged in practice deviating from good medical practice.
 
newsGP understands the risk premium would affect a very small number of practitioners.
 
The Federal Government began subsidising medical indemnity after Australia’s then-largest provider went into provisional liquidation in 2002, leading to a spike in premiums.
 
The subsidies cost $83 million in the last financial year.
 
The RACGP has been involved in consultations regarding the proposed change over the last two years, advocating for other methods of addressing the risks posed by a small group of medical practitioners instead of a risk surcharge, and has sought to minimise the surcharge.
 
The RACGP said it is focused on ensuring GPs are not penalised when seeking insurance due to the location, special interests, or type of services they provide.
 
In its 2017 submission to the Department of Health, the RACGP backed ongoing government subsidies to the industry to avoid spiking premiums, pointing to a major issue in the UK where rising indemnity costs have led to GPs cutting their hours.
 
Much of the specific detail around the risk surcharge will emerge in coming months as the rules are hashed out.
 
Federal Health Minister Greg Hunt is believed to be confident of bipartisan support for the bill, with the changes set to take effect from 1 July next year.
 
However, Shadow Health Minister Chris Bowen has flagged concerns with the part of the bill focusing on midwifery.
 
The new legislation is being introduced in an effort to standardise the current individual contracts that exists between medical indemnity insurers and the Federal Government.
 
In his second reading speech, Minister Hunt said the Government guarantees that the existing seven schemes subsidising medical indemnity would continue to operate.
 
‘If an insurer chooses to provide medical indemnity insurance, they must provide universal cover,’ he told Parliament.
 
‘All insurers accessing the medical indemnity schemes will be subject to the same requirements, including the obligation to provide indemnity cover to any doctor who requires insurance.
 
‘By extending these arrangements to all participating insurers, the Government is ensuring that medical practitioners are protected and will be guaranteed medical indemnity insurance.
 
‘Universal cover protects doctors, allied health workers and midwives from being denied cover where the claims history relates to their speciality, location or patient cohort. It also reduces the risk posed by these individuals by increasing the risk loading which insurers can apply and enabling insurers to refuse cover in exceptional circumstances.
 
‘Insurers will also be supported and given the flexibility to increase the risk loading based on the risk posed by a practitioner up to a 200% cap of the standard premium price.’



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