Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Study into retirement cover for doctors.

Download PDFDownload PDF


31 March 2003


The Government has today announced further details of the study of options to examine retirement (or run-off) cover for medical indemnity for doctors.

The Minister for Revenue and Assistant Treasurer, Senator Helen Coonan, said the initial phase of the study will include a recommendation for a regulation under the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003 to ensure that suitable run-off arrangements are in place for 2003-04. Officials will be convening a meeting of Medical Defence Organisations (MDOs) and doctors' representative groups in early April to discuss the issues.

The study was announced by the Prime Minister on March 19, 2003 following the package of medical indemnity changes because doctors remain concerned about appropriate run-off cover upon retirement.

The study follows the enactment by Parliament of the legislation last week which moves the medical defence industry into a prudentially regulated framework.

The legislation marks an important milestone in the Government's package to ensure affordable medical indemnity cover for doctors and to secure a financially viable medical indemnity industry.

The package includes:

● Federal Government subsidies for certain types of doctors to make premiums more affordable,

● a high cost claims scheme,

● a process for tort law reform involving Commonwealth, State and Territory governments, and

● a system of financing unfunded Incurred But Not Reported (IBNR) liabilities.

The annual cost of the package is around $55 million in 2002-03 and $65 million ongoing.

These measures, taken as a whole, address safety for doctors and their patients and affordability of premiums.

Doctors' representative groups have also raised concerns about the potential for liability over the insured limit (the so called `blue sky' issue).

"It is important that doctors recognise that the previous arrangements were unsustainable and did not guarantee that claims would be paid. While the arrangements appeared to provide unlimited cover, there were significant risks attached to discretionary cover," Senator Coonan said.

"We have come a long way and there is still further to go. The Government is keen to continue to work with those in the medical and medical defence industries to ensure that remaining issues are thoroughly considered and any appropriate steps taken," Senator Coonan said.

© Commonwealth of Australia 2000