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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, allied health professionals and eligible privately practicing midwives, and their patients 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 Commonwealth Medical Indemnity Schemes
The Commonwealth medical indemnity schemes is an Australian Government initiative to provide Government support for medical indemnity insurance for eligible privately practicing medical practitioners, allied health professionals and midwives.
The Commonwealth’s objectives in administering the schemes are to:
- 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 practising midwives.
The Department of Health is responsible for the policy development, oversight, and governance of the schemes.
Services Australia administers the schemes and is responsible for the payment and audit of funds expended under the schemes.
Either under specific legislation or through a contract with the Commonwealth, medical and midwife indemnity insurers are able to access specific administered funds provided by special appropriations for each of the schemes by submitting applications for funding through Services Australia.
The Medical Indemnity Schemes
The schemes are briefly outlined below:
Premium Support Scheme (PSS)
The PSS helps eligible medical practitioners 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 medical practitioners whose premiums exceed 7.5% of their income from private practice.
Procedural GPs working in rural areas are eligible for the 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).
Run-Off Cover Scheme (ROCS)
The ROCS is designed to provide secure ongoing insurance for medical practitioners who have ceased private practice because of retirement, disability, maternity leave, death, or if they discontinue working as a medical practitioner in Australia.
Prior to the introduction of the scheme, medical practitioners who left the private medical workforce often faced significant ongoing costs for "run-off cover", that is, 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 medical practitioners.
The ROCS Support Payment, a levy on the premium income of medical indemnity insurers, meets the ongoing costs of the scheme.
From 1 July 2020, changes to the Medical Indemnity Act 2002 will enable eligible medical practitioners who retire before the age of 65 to access the ROCS.
High Cost Claims Scheme (HCCS)
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 medical practitioners.
Under the HCCS, the Australian Government will reimburse medical indemnity insurers 50% of the insurance payout over $500,000 up to the limit of the practitioner's cover, for claims notified on or after 1 January 2004 and that meet the eligibility criteria under the Medical Indemnity Act 2002.
Exceptional Claims Scheme (ECS)
Under the ECS, medical practitioners are protected against personal liability from eligible claims made against them that exceed the level of their insurance contract cover.
Under the scheme, the Government will pay 100% of the cost of eligible claims that are above the limit of a medical practitioner’s medical indemnity contracts of insurance and equal or exceed the relevant threshold of $20 million. These claims can be either a single very large claim or an aggregate of claims related to an incident that together exceed the $20 million threshold limit.
Medical practitioners are not required to make a contribution towards the ECS. It is fully funded by the Government.
Allied Health High Cost Claim Scheme (AHHCCS)
This new scheme takes effect from 1 July 2020. It will cover 50% of the cost of eligible medical indemnity insurance payouts for eligible claims relating to privately practising allied health professionals (including midwives indemnified under their employer’s professional indemnity insurance policy) registered by the Australian Health Practitioner Regulation Agency (AHPRA). A claim must be greater than the threshold amount (currently $500,000), up to the limit of the allied health professional’s insurance cover.
To be eligible under this scheme, the incident or series of related incidents need to have occurred on or after 1 July 2020 and the allied health professional needs to be registered with AHPRA. This scheme will be open to insurers providing professional indemnity insurance to registered medical practitioners (or their employers) at the date of the scheme’s commencement.
The AHHCCS is largely consistent with the circumstances described in the HCCS. The difference is that the incident, or series of incidents, must have occurred on or after 1 July 2020. However, if the incident occurred before 1 July 2020, allied health practitioners will continue be eligible under the HCCS.
Allied Health Exceptional Claims Scheme (AHECS)
Under this new scheme, privately practising allied health professionals including midwives indemnified under their employer’s professional indemnity insurance policy registered by AHPRA are protected against personal liability for eligible claims that exceed the level of their insurance cover.
The Government will pay 100% of the cost of eligible claims that are above the limit of an allied health professional’s medical indemnity contracts of insurance and equal or exceed the relevant threshold of $20 million. This scheme commences on 1 July 2020.
The AHECS is largely consistent with the circumstances described in the ECS. The difference is that the incident, or series of incidents, must have occurred on or after 1 July 2020. However, if the incident occurred before 1 July 2020, allied health practitioners will continue be eligible under the ECS.
Health practitioners are not required to make a contribution towards the ECS. It is fully funded by the Government.
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
Midwife Professional Indemnity Scheme (MPIS)
The MPIS supports professional indemnity insurers who indemnify eligible privately practicing midwives for claims occurring in relation to their practice of midwifery.
- Under Level 1 of this scheme, the Commonwealth reimburses the insurer for 80 per cent of claims that exceed the $100,000 threshold up to $2 million.
- Under Level 2, the Commonwealth reimburses the insurer for 100 per cent of the cost of the claim above the $2 million threshold.
The Commonwealth has a contractual arrangement with Medical Insurance Australia Pty Ltd (MIGA) from 1 July 2020 – 30 June 2023 for the delivery of the MPIS to eligible midwives.
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 (funded via a levy on premium income).
From 1 July 2020, changes to the MPICCS Act will enable eligible midwives who retire before the age of 65 to access the Midwife ROCS.
