Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Medical Indemnity (Prudential Supervision and Product Standards) Bill 2003

Part 3 Product standards for medical indemnity insurance contracts

Division 1 Minimum cover

16   Minimum cover amount

                   The minimum cover amount for the purposes of this Division is:

                     (a)  $5 million; or

                     (b)  such other amount as is prescribed by the regulations.

17   Minimum cover for single claim

Circumstances in which section applies

             (1)  This subsection applies to a person if:

                     (a)  under a contract of insurance (the relevant contract ), the person provides medical indemnity cover for a health care professional; and

                     (b)  the health care professional is:

                              (i)  a medical practitioner; or

                             (ii)  a registered health professional prescribed by the regulations.

Offence

             (2)  A person (the insurer ) commits an offence if:

                     (a)  subsection (1) applies to the insurer; and

                     (b)  the relevant contract is entered into, comes into effect or is renewed at a particular time on or after 1 July 2003; and

                     (c)  the maximum amount payable by the insurer under the relevant contract in relation to a single compensation claim made against the health care professional would, but for subsection (4), be less than the minimum cover amount applicable at that time.

Penalty:  Imprisonment for 12 months.

             (3)  Subsection (2) does not apply if it would be reasonable to assume, at the time the relevant contract is entered into, comes into effect or is renewed, that every health care incident to which the compensation claim would relate would be one occurring outside Australia and the external Territories.

Note:          A defendant bears an evidential burden in relation to the matter in this subsection (see subsection 13.3(3) of the Criminal Code ).

Maximum amount payable for single claim

             (4)  If:

                     (a)  subsection (1) applies to a person (the insurer ); and

                     (b)  the relevant contract is entered into, comes into effect or is renewed at a particular time on or after 1 July 2003; and

                     (c)  a compensation claim is made against the health care professional; and

                     (d)  an amount is payable by the insurer under the relevant contract in relation to the compensation claim; and

                     (e)  the maximum amount payable by the insurer under the relevant contract in relation to the compensation claim would, but for this subsection, be less than the minimum cover amount applicable at that time;

the maximum amount payable by the insurer under the relevant contract in relation to the compensation claim is the minimum cover amount applicable at that time (instead of the maximum amount provided for in the relevant contract).

             (5)  Subsection (4) does not apply if every health care incident to which the compensation claim relates is one occurring outside Australia and the external Territories.

             (6)  To avoid doubt, subsection (4) applies whether or not the insurer is convicted of an offence against subsection (2).

18   Minimum annual cover—incident-occurring based cover

Circumstances in which section applies

             (1)  This subsection applies to a person if:

                     (a)  under a contract of insurance (the relevant contract ), the person provides medical indemnity cover for a health care professional; and

                     (b)  the health care professional is:

                              (i)  a medical practitioner; or

                             (ii)  a registered health professional prescribed by the regulations; and

                     (c)  the relevant contract provides for incident-occurring based cover.

Note:          For incident-occurring based cover , see subsection 6(4). For the purposes of this section, ERB and DDR cover are not incident-occurring based cover.

             (2)  For the purposes of this section:

                     (a)  the qualifying incident period is the period during which a health care incident must occur for the person to provide medical indemnity cover under the relevant contract in relation to the incident; and

                     (b)  there is only one relevant period and it is the qualifying incident period if the qualifying incident period is a year or shorter than a year; and

                     (c)  the year starting at the beginning of the qualifying incident period, and each succeeding year or part of a year in the qualifying incident period, is a relevant period if the qualifying incident period is longer than a year.

Offence

             (3)  A person (the insurer ) commits an offence if:

                     (a)  subsection (1) applies to the insurer; and

                     (b)  the relevant contract is entered into, comes into effect or is renewed at a particular time on or after 1 July 2003; and

                     (c)  the maximum amount payable, in aggregate, by the insurer under the relevant contract in relation to all the compensation claims that are made against the health care professional in relation to health care incidents that occur during a particular relevant period would, but for subsection (5), be less than the minimum cover amount applicable at that time.

Penalty:  Imprisonment for 12 months.

             (4)  Subsection (3) does not apply if it would be reasonable to assume, at the time the relevant contract is entered into, comes into effect or is renewed, that every health care incident to which the compensation claims would relate would be one occurring outside Australia and the external Territories.

Note:          A defendant bears an evidential burden in relation to the matter in this subsection (see subsection 13.3(3) of the Criminal Code ).

Maximum amount payable for multiple claims

             (5)  If:

                     (a)  subsection (1) applies to a person (the insurer ); and

                     (b)  the relevant contract is entered into, comes into effect or is renewed at a particular time on or after 1 July 2003; and

                     (c)  amounts are payable by the insurer under the relevant contract in relation to 2 or more compensation claims (the multiple claims ) that are made against the health care professional in relation to health care incidents that occur in a particular relevant period; and

                     (d)  the maximum amount payable by the insurer under the relevant contract in relation to the multiple claims would, but for this subsection, be less than the minimum cover amount applicable at that time;

the maximum amount payable, in aggregate, by the insurer under the relevant contract in relation to the multiple claims is the minimum cover amount applicable at that time (instead of the maximum amount provided for in the relevant contract).

             (6)  Subsection (5) does not apply if every health care incident to which the multiple claims relate is one occurring outside Australia and the external Territories.

             (7)  To avoid doubt, subsection (5) applies whether or not the insurer is convicted of an offence against subsection (3).

19   Minimum annual cover—other cover

Circumstances in which section applies

             (1)  This subsection applies to a person if:

                     (a)  under a contract of insurance (the relevant contract ), the person provides medical indemnity cover for a health care professional; and

                     (b)  the health care professional is:

                              (i)  a medical practitioner; or

                             (ii)  a registered health professional prescribed by the regulations; and

                     (c)  the contract does not provide for incident-occurring based cover.

Note:          For incident-occurring based cover , see subsection 6(4). For the purposes of this section, ERB and DDR cover are not incident-occurring based cover.

             (2)  For the purposes of this section:

                     (a)  the qualifying claims period is the period specified in the relevant contract as the period during which a compensation claim against the health care professional has to be made for medical indemnity cover to be provided in relation to the compensation claim; and

                     (b)  there is only one relevant period and it is the qualifying claims period if the qualifying claims period is a year or shorter than a year; and

                     (c)  the year starting at the beginning of the qualifying claims period, and each succeeding year or part of a year in the qualifying claims period, is a relevant period if the qualifying claims period is longer than a year.

Note:          Paragraph (a)—subsection 4(9) operates on the reference in this paragraph to the claim having to be made during a period.

Offence

             (3)  A person (the insurer ) commits an offence if:

                     (a)  subsection (1) applies to the insurer; and

                     (b)  the relevant contract is entered into, comes into effect or is renewed at a particular time on or after 1 July 2003; and

                     (c)  the maximum amount payable, in aggregate, by the insurer under the relevant contract in relation to all the compensation claims that are made against the health care professional during a particular relevant period would, but for subsection (5), be less than the minimum cover amount applicable at that time.

Note:          Paragraph (c)—subsection 4(9) operates on the reference in this paragraph to the claim having to be made during a period.

Penalty:  Imprisonment for 12 months.

             (4)  Subsection (3) does not apply if it would be reasonable to assume, at the time the relevant contract is entered into, comes into effect or is renewed, that every health care incident to which the compensation claims would relate would be one occurring outside Australia and the external Territories.

Note:          A defendant bears an evidential burden in relation to the matter in this subsection (see subsection 13.3(3) of the Criminal Code ).

Maximum amount payable for multiple claims

             (5)  If:

                     (a)  subsection (1) applies to a person (the insurer ); and

                     (b)  the relevant contract is entered into, comes into effect or is renewed at a particular time on or after 1 July 2003; and

                     (c)  amounts are payable by the insurer under the relevant contract in relation to 2 or more compensation claims (the multiple claims ) that are made against the health care professional during a particular relevant period; and

                     (d)  the maximum amount payable by the insurer under the relevant contract in relation to the multiple claims would, but for this subsection, be less than the minimum cover amount applicable at that time;

the maximum amount payable, in aggregate, by the insurer under the relevant contract in relation to the multiple claims is the minimum cover amount applicable at that time (instead of the maximum amount provided for in the relevant contract).

Note:          Paragraph (c)—subsection 4(9) operates on the reference in this paragraph to the claim having to be made during a period.

             (6)  Subsection (5) does not apply if every health care incident to which the multiple claims relate is one occurring outside Australia and the external Territories.

             (7)  To avoid doubt, subsection (5) applies whether or not the insurer is convicted of an offence against subsection (3).

20   Amount payable by insurer

                   To avoid doubt, in working out for the purposes of this Division the maximum amount payable by an insurer under a contract of insurance, disregard the following:

                     (a)  any right the insurer may have to a high cost claim indemnity under the Medical Indemnity Act 2002 ;

                     (b)  any right the insurer may have to contribution from another insurer;

                     (c)  any right to which the insurer is subrogated under the contract of insurance.



 

Division 2 Offers to provide retroactive and run-off cover for otherwise uncovered prior incidents

Subdivision A Regulated insurance contracts

21   Regulated insurance contracts

Regulated insurance contract

             (1)  For the purposes of this Division, a contract is a regulated insurance contract if:

                     (a)  the contract is a contract of insurance under which the insurer provides medical indemnity cover for a health care professional in relation to compensation claims; and

                     (b)  the health care professional is:

                              (i)  a medical practitioner; or

                             (ii)  a registered health professional prescribed by the regulations; and

                     (c)  the cover provided for by the contract is claims-made based cover; and

                     (d)  the contract is entered into, comes into effect or is renewed on or after 1 July 2003.

Note:          Paragraph (c)—for claims-made based cover , see subsections 6(2) and (3). For the purposes of this section, ERB and DDR cover are not claims-made based cover.

Client

             (2)  For the purposes of this Division, the client for the regulated insurance contract is the other party to the regulated insurance contract (who may be the health care professional or someone else).

Claims period

             (3)  For the purposes of this Division, the claims period for the regulated insurance contract is the period specified in the contract as the period during which a compensation claim against the health care professional has to be made for medical indemnity cover to be provided in relation to the compensation claim.

Note:          Subsection 4(9) operates on the reference to the claim having to be made during a period.

Health care professional’s otherwise uncovered prior incidents

             (4)  For the purposes of this Division, the health care professional’s otherwise uncovered prior incidents for the regulated insurance contract are:

                     (a)  for an offer to be made under section 22—the health care incidents:

                              (i)  that occurred before the start of the claims period for the regulated insurance contract; and

                             (ii)  for which the health care professional would otherwise be without medical indemnity cover; and

                     (b)  for an offer to be made under section 23—the health care incidents:

                              (i)  that have occurred, or will occur, before the contract that arises from the offer would take effect; and

                             (ii)  for which the health care professional would otherwise be without medical indemnity cover.

Subdivision B Insurer’s responsibilities

22   Additional offer of retroactive cover when regulated insurance contract entered into, comes into effect or is renewed

Offence—compulsory offer

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

                     (a)  a regulated insurance contract is entered into, comes into effect or is renewed; and

                     (b)  the insurer provides medical indemnity cover for a health care professional under the regulated insurance contract; and

                     (c)  the insurer does not make an offer (the compulsory offer ) to the client that satisfies all of the following subparagraphs:

                              (i)  the offer is an offer to provide medical indemnity cover for the health care professional in relation to all compensation claims that are made against the health care professional, during a period that includes the whole of the claims period for the regulated insurance contract, in relation to the health care professional’s otherwise uncovered prior incidents;

                             (ii)  the offer is made at the same time as the insurer makes the offer or the invitation that leads to the regulated insurance contract or the renewal;

                            (iii)  the offer is a complying offer.

Note 1:       For complying offer , see section 24.

Note 2:       Subparagraph (c)(i)—subsection 4(9) operates on the reference in this subparagraph to the claims being made during a period.

Penalty:  Imprisonment for 12 months.

          (1A)  In determining whether an offer made by an insurer to provide medical indemnity cover for a health care professional satisfies subparagraph (1)(c)(i), disregard:

                     (a)  an otherwise uncovered prior incident of the health care professional; or

                     (b)  a compensation claim in relation to an incident of that kind;

if it is reasonable and appropriate for the insurer to exclude the incident or claim from the cover being offered, having regard to:

                     (c)  the nature of the health care provided by the health care professional during the period during which the otherwise uncovered prior incident occurred; and

                     (d)  the kinds of exclusions that are usually provided for in contracts of insurance that provide similar cover to the cover being offered; and

                     (e)  any other relevant consideration.

 Offence—entering into regulated insurance contract etc. before response to compulsory offer received

             (2)  A person (the insurer ) commits an offence if:

                     (a)  a regulated insurance contract is entered into, comes into effect or is renewed; and

                     (b)  the insurer provides medical indemnity cover for a health care professional under the regulated insurance contract; and

                     (c)  the regulated insurance contract is entered into, comes into effect or is renewed before the client has given the insurer a written response to the compulsory offer.

Penalty:  Imprisonment for 12 months.

Offence—record keeping

             (3)  A person (the insurer ) commits an offence if:

                     (a)  a regulated insurance contract is entered into, comes into effect or is renewed; and

                     (b)  the insurer provides medical indemnity cover for a health care professional under the regulated insurance contract; and

                     (c)  the insurer does not keep a copy of the following:

                              (i)  the compulsory offer;

                             (ii)  the client’s written response to the compulsory offer;

                            (iii)  any other offer that the insurer makes to the client, while the compulsory offer is open for acceptance by the client, to provide medical indemnity cover for the health care professional in relation to an otherwise uncovered prior incident of the health care professional;

                            (iv)  any invitations that the insurer makes to the client, while the compulsory offer is open for acceptance by the client, to make an offer to enter into a contract of insurance under which the insurer would provide medical indemnity cover for the health care professional in relation to an otherwise uncovered prior incident of the health care professional;

                            for the period of 5 years starting on the day on which the compulsory offer is made.

Penalty:  Imprisonment for 6 months.

Defences for offences against subsections (1), (2) and (3)

             (4)  Subsections (1), (2) and (3) do not apply if:

                     (a)  the regulated insurance contract provides medical indemnity cover for the health care professional in relation to all the compensation claims referred to in paragraph (1)(c); or

                     (b)  the health care professional has no otherwise uncovered prior incidents; or

                     (c)  every health care incident covered by the regulated insurance contract is, or would be, one occurring outside Australia and the external Territories.

Note:          A defendant bears an evidential burden in relation to the matter in this subsection (see subsection 13.3(3) of the Criminal Code) .

          (4A)  In determining whether a regulated insurance contract provides the cover referred to in paragraph (4)(a) for a health care professional, disregard:

                     (a)  an otherwise uncovered prior incident of the health care professional; or

                     (b)  a compensation claim in relation to an incident of that kind;

if it is reasonable and appropriate for the insurer to exclude the incident or claim from the cover provided by the contract, having regard to:

                     (c)  the nature of the health care provided by the health care professional during the period during which the otherwise uncovered prior incident occurred; and

                     (d)  the kinds of exclusions that are usually provided for in contracts of insurance that provide similar cover to the cover being offered; and

                     (e)  any other relevant consideration.

             (5)  Subsection (1) does not apply if:

                     (a)  the insurer makes an offer for the purposes of subsection (1); and

                     (b)  the only reason why the offer does not satisfy subparagraph (1)(c)(i) is that the offer does not extend to some of the health care professional’s otherwise uncovered prior incidents; and

                     (c)  the insurer has reasonable grounds for believing that the offer does extend to all the health care professional’s otherwise uncovered prior incidents.

Note:          A defendant bears an evidential burden in relation to the matter in this subsection (see subsection 13.3(3) of the Criminal Code) .

Compulsory offer has no effect in certain circumstances

             (6)  A compulsory offer made by an insurer for the purposes of subsection (1) ceases to have effect if the winding up of the insurer starts before the offer is accepted.

Note:          An insurer must not carry on insurance business after the winding up of the insurer has started: see section 116 of the Insurance Act 1973 .

Effect of subsection (1)

             (7)  Subsection (1) has effect subject to section 116 of the Insurance Act 1973 .

Note:          This means that an insurer does not have to make a compulsory offer for the purposes of subsection (1) once the winding up of the insurer has started.

23   Additional offer of run-off cover when particular events happen during claims period for regulated insurance contract

Offence—compulsory offer

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

                     (a)  the insurer provides medical indemnity cover for a health care professional under a regulated insurance contract; and

                     (b)  an event prescribed by the regulations for the purposes of this paragraph occurs during the claims period for the regulated insurance contract; and

                     (c)  the insurer does not make an offer (the compulsory offer ) to the client that satisfies all of the following subparagraphs:

                              (i)  the offer is an offer to provide medical indemnity cover for the health care professional in relation to compensation claims that are made against the health care professional in relation to the health care professional’s otherwise uncovered prior incidents and the offer satisfies the requirements specified in the regulations for the purposes of this subparagraph;

                             (ii)  the offer is made within 28 days after the insurer becomes aware of that event;

                            (iii)  the offer is a complying offer.

Note:          For complying offer , see section 24.

Penalty:  Imprisonment for 12 months.

             (2)  Without limiting subparagraph (1)(c)(i), the regulations made for the purposes of that subparagraph may specify requirements in relation to:

                     (a)  the compensation claims to be covered by the contract being offered; and

                     (b)  the limits on the amounts payable by the insurer under the contract being offered (whether in relation to an individual compensation claim or in relation to compensation claims made during a particular period).

Without limiting paragraph (a), the regulations may specify the compensation claims by reference to the period during which the compensation claims can be made.

Offence—entering into new contract before response to compulsory offer received

          (2A)  For the purposes of making an offer to provide the cover referred to in subparagraph (1)(c)(i) for a health care professional, disregard the regulated insurance contract referred to in paragraph (1)(a) in determining the health care professional’s otherwise uncovered prior incidents.

          (2B)  In determining whether an offer made by an insurer to provide medical indemnity cover for a health care professional satisfies subparagraph (1)(c)(i), disregard:

                     (a)  an otherwise uncovered prior incident of the health care professional; or

                     (b)  a compensation claim in relation to an incident of that kind;

if it is reasonable and appropriate for the insurer to exclude the incident or claim from the cover being offered, having regard to:

                     (c)  the nature of the health care provided by the health care professional during the period during which the otherwise uncovered prior incident occurred; and

                     (d)  the kinds of exclusions that are usually provided for in contracts of insurance that provide similar cover to the cover being offered; and

                     (e)  any other relevant consideration.

             (3)  A person (the insurer ) commits an offence if:

                     (a)  the person provides medical indemnity cover for a health care professional under a regulated insurance contract; and

                     (b)  paragraph (1)(b) applies to the regulated insurance contract; and

                     (c)  after the insurer makes the compulsory offer, the insurer subsequently enters into a contract of insurance with the client to provide medical indemnity cover for the health care professional in relation to an otherwise uncovered prior incident of the health care professional; and

                     (d)  the contract referred to in paragraph (c) is not entered into in response to the compulsory offer; and

                     (e)  the contract referred to in paragraph (c) is entered into before the client has given the insurer a written response to the compulsory offer.

Penalty:  Imprisonment for 12 months.

Offence—record keeping

             (4)  A person (the insurer ) commits an offence if:

                     (a)  the insurer provides medical indemnity cover for a health care professional under a regulated insurance contract; and

                     (b)  paragraph (1)(b) applies to the regulated insurance contract; and

                     (c)  the insurer does not keep the following:

                              (i)  a copy of the compulsory offer;

                             (ii)  either a copy of the client’s written response to the compulsory offer or a written record (made within 14 days after the end of the compulsory offer period) of the client’s response, or failure to respond, to the compulsory offer;

                            (iii)  a copy of any other offer that the insurer makes to the client, while the compulsory offer is open for acceptance by the client, to provide medical indemnity cover for the health care professional in relation to an otherwise uncovered prior incident of the health care professional;

                            (iv)  a copy of any invitations that the insurer makes to the client, while the compulsory offer is open for acceptance by the client, to make an offer to enter into a contract of insurance under which the insurer would provide medical indemnity cover for the health care professional in relation to an otherwise uncovered prior incident of the health care professional;

                            for the period of 5 years starting on the day on which the compulsory offer is made.

Penalty:  Imprisonment for 6 months.

No offences if regulations not in force

          (4A)  The insurer commits an offence against subsection (1), (3) or (4) only if regulations are in force for the purposes of subparagraph (1)(c)(i) both:

                     (a)  when the event referred to in paragraph (1)(b) occurs; and

                     (b)  when the period of 28 days referred to in subparagraph (1)(c)(ii) ends.

If this is so, the requirements that the compulsory offer must satisfy are those specified in the regulations as in force when the event referred to in paragraph (1)(b) occurs.

Defences for offences against subsections (1), (3) and (4)

             (5)  Subsections (1), (3) and (4) do not apply if every health care incident covered by the regulated insurance contract is, or would be, one occurring outside Australia and the external Territories.

Note:          A defendant bears an evidential burden in relation to the matter in this subsection (see subsection 13.3(3) of the Criminal Code) .

             (6)  Subsection (1) does not apply if:

                     (a)  the insurer makes an offer for the purposes of subsection (1); and

                     (b)  the only reason why the offer does not satisfy subparagraph (1)(c)(i) is that the offer does not extend to some of the health care professional’s otherwise uncovered prior incidents; and

                     (c)  the insurer has reasonable grounds for believing that the offer does extend to all the health care professional’s otherwise uncovered prior incidents.

Note:          A defendant bears an evidential burden in relation to the matter in this subsection (see subsection 13.3(3) of the Criminal Code) .

Compulsory offer has no effect in certain circumstances

             (7)  A compulsory offer made by an insurer for the purposes of subsection (1) ceases to have effect if the winding up of the insurer starts before the offer is accepted.

Note:          An insurer must not carry on insurance business after the winding up of the insurer has started: see section 116 of the Insurance Act 1973 .

Effect of subsection (1)

             (8)  Subsection (1) has effect subject to section 116 of the Insurance Act 1973 .

Note:          This means that an insurer does not have to make a compulsory offer for the purposes of subsection (1) once the winding up of the insurer has started.

24   Complying offer

Complying offer test—general

             (1)  For the purposes of section 22 or 23, a person (the insurer ) who provides medical indemnity cover under a regulated insurance contract makes a complying offer to the client to provide medical indemnity cover for a health care professional if and only if:

                     (a)  the offer is to provide medical indemnity cover for the health care professional under a contract of insurance; and

                     (b)  the offer complies with subsection (2).

The offer must be made to the health care professional’s legal personal representative if the health care professional has died.

             (2)  The offer complies with this subsection if and only if:

                     (a)  the offer is made in writing; and

                     (b)  the offer remains open for acceptance by the client for a period of at least 28 days after the day on which the offer is made; and

                     (c)  the procedures for dealing with claims under the contract being offered are substantially the same as those provided for in:

                              (i)  the proposed regulated contract (if the offer is made for the purposes of section 22); or

                             (ii)  the current regulated contract (if the offer is made for the purposes of section 23); and

                     (d)  the claims and incidents covered, and the exclusions from the claims and incidents covered, by the contract being offered are reasonable and appropriate having regard to:

                              (i)  the nature of the health care provided by the health care professional during the period or periods during which the incidents covered by the contract occurred; and

                             (ii)  the kinds of claims and incidents that are usually covered by contracts of insurance that provide similar cover to the cover being offered; and

                            (iii)  the kinds of exclusions that are usually provided for in contracts of insurance that provide similar cover to the cover being offered; and

                            (iv)  any other relevant consideration; and

                     (e)  the offer specifies the premium payable by the client for the cover being offered; and

                      (f)  the premium payable by the client for the cover being offered is reasonable (see subsection (3)); and

                     (g)  the other terms and conditions of the contract being offered comply with the requirements (if any) prescribed by the regulations for the purposes of this paragraph; and

                     (h)  the offer includes a clear, concise and effective explanation of:

                              (i)  the significant characteristics and features of the cover being offered; and

                             (ii)  the significant rights, terms and conditions and obligations attaching to the cover being offered; and

                            (iii)  the risks involved for the health care professional in not accepting the offer; and

                            (iv)  the options that will be available to the health care professional if the health care professional does not accept the offer; and

                             (v)  any other matters prescribed by the regulations.

Matters to be taken into account in determining whether premium is reasonable

             (3)  In deciding whether the premium payable by the client for the cover being offered is reasonable, regard is to be had to:

                     (a)  the nature of the risks being assumed by the insurer; and

                     (b)  the claims handling expenses, and other administrative expenses, the insurer has incurred and can reasonably be expected to incur in relation to the cover being offered; and

                     (c)  the expenses the insurer can reasonably be expected to incur in obtaining appropriate reinsurance; and

                     (d)  the expenses the insurer can reasonably be expected to incur in capital raising and prudential compliance that are reasonably attributable to the cover being offered; and

                     (e)  the amount that represents a reasonable profit margin for the insurer; and

                      (f)  the amount of any relevant taxes or statutory charges payable by the insurer; and

                     (g)  the information provided, or not provided, to the insurer by the client in relation to matters relevant to assessing the risk being assumed by the insurer; and

                     (h)  the guidelines (if any) issued by APRA for the purposes of this paragraph.

Definitions

             (5)  In this section:

current regulated contract means the regulated insurance contract referred to in paragraph 23(1)(a).

proposed regulated contract means the regulated insurance contract referred to in paragraph 22(1)(a).

25   APRA guidelines

             (1)  APRA may issue guidelines for determining for the purposes of section 24 whether a premium payable by an insured under a contract of insurance for particular cover is reasonable.

             (2)  A guideline issued under subsection (1) is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901 .

26   Federal Court may order insurer to make offer

             (1)  If an insurer contravenes subsection 22(1) or 23(1) by failing to make an offer, the Federal Court of Australia may, on application by the client or ASIC, grant an injunction ordering the insurer to make an offer.

             (2)  The Court may specify in its order:

                     (a)  the terms in which the offer is to be made; and

                     (b)  the time by which the offer must be made; and

                     (c)  the period for which the offer must be open for acceptance by the health care professional; and

                     (d)  the time from which the contract that results from the offer is to have effect if the offer is accepted.



 

Division 3 Intermediary’s responsibilities

27   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 a regulated insurance contract; or

                             (ii)  recommends that someone enter into or renew a regulated insurance contract; and

                     (c)  either:

                              (i)  the regulated insurance contract breaches, or would breach, the minimum cover rules; or

                             (ii)  the regulated insurance contract is a new regulated insurance contract and the insurer does not make a compulsory new contract offer in relation to the regulated insurance contract.

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)  Subparagraph (1)(b)(ii) does not apply to a recommendation by the intermediary if the intermediary has reasonable grounds to believe that a compulsory new contract offer will be made in relation to the new regulated insurance contract before that contract is entered into or is renewed.

Note:          A defendant bears an evidential burden in relation to the matter in this subsection (see subsection 13.3(3) of the Criminal Code ).

             (4)  To avoid doubt, the intermediary commits the offence whether or not the insurer commits, or would commit, an offence against subsection 17(2), 18(3), 19(3) or 22(1).