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Wednesday, 26 June 2002
Page: 4386


Mr SLIPPER (Parliamentary Secretary to the Minister for Finance and Administration) (10:04 AM) —I move:

That this bill be now read a second time.

On 3 May this year, a provisional liquidator was appointed to United Medical Protection and its subsidiary, Australasian Medical Insurance Ltd—the UMP Group. This followed a resolution of the boards of the UMP Group on 29 April this year to make an application for the appointment of a provisional liquidator.

The purpose of the Medical Indemnity Agreement (Financial Assistance—Binding Commonwealth Obligations) Bill 2002 is to appropriate funds for payments in accordance with an indemnity agreement between the Commonwealth and the UMP Group. The bill also confirms the commitments of the government under the indemnity agreement.

On 29 April this year, the government announced that it would provide a short-term indemnity to the UMP Group to allow the members of the UMP Group to continue practicing.

On 1 May this year, the Minister for Health and Ageing wrote to medical practitioners stating that the Commonwealth would guarantee to the provisional liquidator the obligations of the UMP Group to pay any amount properly payable in the period 29 April to 30 June 2002 for claims under a current or past policy. Interim arrangements for the payment of some claims were entered into on 22 May 2002 and approved by the Supreme Court of New South Wales on 24 May 2002.

The Commonwealth also committed to providing a guarantee to the provisional liquidator or to any subsequently appointed liquidator to enable the provision of cover in respect of valid claims that arise at any time for:

· holders of a current policy for events that occur between 29 April and 30 June 2002; and

· holders of a policy that expires and is renewed by the provisional liquidator before 30 June 2002 for events that occur between 29 April and 30 June 2002.

On Friday 31 May 2002, the Prime Minister announced an extension of the guarantee to 31 December 2002 on modified terms. These arrangements allow the provisional liquidator to:

· meet claims notified in the period 29 April to 31 December 2002 under an existing (or renewed) claims made policy;

· renew policies on a claims made basis for the period until 31 December 2002; and

· continue to meet claims that were notified before 29 April 2002 and are properly payable in the period 1 July 2002 to 31 December 2002.

The Prime Minister also announced on 31 May 2002 that the Commonwealth would introduce a levy to fund any liability incurred by the Commonwealth under a medical indemnity agreement as a result of the extension of the guarantee on modified terms. This levy would be part of broader levy arrangements to meet the unfunded incurred but not reported liabilities (IBNRs) of medical defence organisations. Separate legislation for the levy on certain medical practitioners and the IBNR scheme will be introduced once the details have been finalised.

It is intended that a deed of indemnity between the Commonwealth, the UMP Group, and the provisional liquidator of the UMP Group will be entered into and will form a binding legal agreement between the parties to give effect to the arrangements announced by the government; that is, the medical indemnity agreements covered by this bill will be legally binding notwithstanding the operations of this bill. The provisions of the bill are not intended to imply that any future Commonwealth indemnity needs to be supported by legislation.

This bill provides for an appropriation out of the Consolidated Revenue Fund for the purposes of payments in accordance with the bill. While funding is not required immediately, the bill will provide for the funds when required.

I commend the bill to the House, and I present the explanatory memorandum.

Debate (on motion by Mr Cox) adjourned.