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Medical Indemnity (Prudential Supervision and Product Standards) Bill 2003

Part 2 Prudential requirements for provision of medical indemnity cover

Division 1 Provision of medical indemnity cover

10   Medical indemnity cover to be provided only by general insurers and only under contracts of insurance

             (1)  This subsection applies to a person if, on or after 1 July 2003:

                     (a)  the person:

                              (i)  offers to enter into; or

                             (ii)  invites an offer to enter into;

                            an arrangement under which the person would provide medical indemnity cover for a health care professional; or

                     (b)  the person enters into an arrangement under which the person provides medical indemnity cover for a health care professional; or

                     (c)  an arrangement under which the person provides medical indemnity cover for a health care professional comes into effect; or

                     (d)  the person offers to renew an arrangement under which a person provides medical indemnity cover for a health care professional; or

                     (e)  an arrangement under which the person provides medical indemnity cover for a health care professional is renewed.

The relevant medical indemnity cover is the cover referred to in paragraph (a), (b), (c), (d), or (e).

             (2)  A person (the cover provider ) commits an offence if:

                     (a)  subsection (1) applies to the cover provider; and

                     (b)  either:

                              (i)  the cover provider is a constitutional corporation; or

                             (ii)  the cover provider is not a constitutional corporation but the arrangement has, or would have, a relevant constitutional connection; and

                     (c)  either:

                              (i)  the cover provider is not a general insurer; or

                             (ii)  the relevant medical indemnity cover is not, or would not be, effected by means of a contract of insurance.

Penalty:  Imprisonment for 12 months.

             (3)  To avoid doubt:

                     (a)  paragraph (1)(a) applies to offers or invitations that are received in Australia or the external Territories:

                              (i)  regardless of where any resulting arrangement is entered into; and

                             (ii)  whether or not any resulting arrangement is governed by the laws of a State or Territory; and

                     (b)  paragraph (1)(d) applies to offers that are received in Australia or the external Territories:

                              (i)  regardless of where any resulting renewal takes place; and

                             (ii)  whether or not the arrangement is governed by the laws of a State or Territory.

11   Intermediary’s responsibilities

             (1)  A person (the intermediary ) commits an offence if:

                     (a)  the intermediary provides a financial service on or after 1 July 2003; and

                     (b)  in the course of providing that service, the intermediary:

                              (i)  arranges, or offers to arrange, for someone to enter into or renew; or

                             (ii)  recommends that someone enter into or renew;

                            an arrangement under which a person (the cover provider ) provides, or would provide, medical indemnity cover for a health care professional; and

                     (c)  either:

                              (i)  the cover provider is a constitutional corporation; or

                             (ii)  the arrangement has, or would have, a relevant constitutional connection; and

                     (d)  either:

                              (i)  the cover provider is not a general insurer; or

                             (ii)  the arrangement is not, or would not be, effected by means of a contract of insurance.

Penalty:  Imprisonment for 12 months.

             (2)  It does not matter whether the intermediary provides the financial service in the intermediary’s own right or as a representative of another person.

             (3)  To avoid doubt, the intermediary commits the offence whether or not the cover provider commits, or would commit, an offence against subsection 10(2).



 

Division 2 Transitional arrangements

12   Effect of determination under subsection 13(3)

Section applies to body corporate while determination under subsection 13(3) is in force

             (1)  This section applies to a body corporate while a determination under subsection 13(3) is in force in relation to the body corporate.

Authorisation to carry on insurance business in Australia

             (2)  APRA must not refuse an application by the body corporate under section 12 of the Insurance Act 1973 on the basis that the body corporate does not, or would not, meet the requirements of a prudential standard to the extent to which the standard imposes a minimum capital requirement.

Note:          This subsection is not relevant for a body corporate if at the time the body corporate applied for a determination under section 13 the body corporate was already a general insurer.

Grounds for revoking authorisation

             (3)  Paragraph 15(1)(e) of the Insurance Act 1973 does not apply to the body corporate.

Application of prudential standard imposing minimum capital requirement

             (4)  Any prudential standard, to the extent to which the standard imposes a minimum capital requirement, does not apply to the body corporate.

13   APRA determination that minimum capital requirements do not apply

Application for determination

             (1)  A body corporate that:

                     (a)  is an MDO within the meaning of the Medical Indemnity Act 2002 ; or

                     (b)  is prescribed by the regulations for the purposes of this paragraph; or

                     (c)  is related (within the meaning of the Corporations Act 2001 ) to a body corporate to which paragraph (a) or (b) applies;

may apply to APRA for a determination under subsection (3) that the minimum capital requirements do not apply to the body corporate during the period (the transition period ) that starts on 1 July 2003 and ends on 30 June 2008.

             (2)  The application must be in the form prescribed by the regulations.

Determination that minimum capital requirements do not apply

             (3)  APRA must determine that the minimum capital requirements do not apply to the body corporate during the transition period if:

                     (a)  when it applies, the body corporate:

                              (i)  is not a general insurer; or

                             (ii)  is a general insurer and is prescribed by the regulations for the purposes of this subparagraph; and

                     (b)  when it applies, the body corporate does not, or would not, satisfy the prudential standards, to the extent to which they impose minimum capital requirements; and

                     (c)  the body corporate lodges a funding plan with the application; and

                     (d)  the funding plan:

                              (i)  is in the form prescribed by the regulations; and

                             (ii)  is certified by an independent auditor and by an independent actuary; and

.                           (iii)  complies with the guidelines issued by APRA under subsection (9).

Note:          Paragraph (c)—If a funding plan lodged with an application does not comply with the requirements set out in paragraph (d), the body corporate will need to make another application under this section and lodge another funding plan with that application.

          (3A)  APRA must make the determination within 30 days after receiving the application.

          (3B)  The determination must be in writing and APRA must give the body corporate a copy of the determination within 7 days after making the determination.

When determination ceases to have effect

             (4)  The determination ceases to have effect:

                     (a)  on 30 June 2008; or

                     (b)  if APRA revokes the determination before 30 June 2008—on the day specified in the revocation as the day on which the revocation takes effect.

Revocation of determination

             (5)  APRA may revoke the determination if and only if:

                     (a)  the body corporate:

                              (i)  fails to meet a commitment given, or a target set, in the funding plan; or

                             (ii)  otherwise fails to comply with the funding plan;

                            and the failure is substantial; or

                     (b)  the body corporate no longer carries on a business of providing medical indemnity cover for health care professionals; or

                     (c)  the body corporate requests APRA, in writing, to revoke the determination.

             (6)  The revocation must:

                     (a)  be in writing; and

                     (b)  specify the day on which the revocation takes effect.

The day specified under paragraph (b) must be at least 28 days after the day on which the revocation is made.

             (7)  APRA must give a copy of the revocation to the body corporate within 7 days after the day on which the revocation is made.

No determinations to be made after 1 July 2005

             (8)  No determinations under subsection (3) are to be made on or after 1 July 2005.

APRA guidelines

             (9)  APRA may issue guidelines on:

                     (a)  the matters to be included in a funding plan lodged for the purposes of this section (including the nature of the commitments to be given, and the targets to be set, in the plan); and

                     (b)  the matters as to which an independent auditor or independent actuary is to certify; and

                     (c)  the qualifications an auditor or actuary must have to give certificates for the purposes of this section; and

                     (d)  the necessary degree of independence from a body corporate that an auditor or actuary must have to give a certificate in relation to the body corporate’s funding plan.

           (10)  Without limiting paragraph (9)(a), the guidelines may provide that the funding plan must include a specified commitment by the body corporate to report to APRA in relation to its compliance with the funding plan.

           (11)  A guideline issued under subsection (9) is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901 .

14   Administrative review

                   An application may be made to the Administrative Appeals Tribunal for review of:

                     (a)  a decision by APRA not to make a determination under subsection 13(3); or

                     (b)  a decision by APRA under subsection 13(5) to revoke a determination made under subsection 13(3).

Note:          Section 27A of the Administrative Appeals Tribunal Act 1975 requires notification of a decision that is reviewable.

15   Application of section 115A of the Insurance Act 1973

                   Section 115A of the Insurance Act 1973 applies as if a reference to this Part in the definition of relevant legislation in subsection (5) of that section included a reference to a funding plan lodged with an application made under section 13 of this Act.