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Safer medical indemnity system starts tomorrow.

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30 June 2003


Australian doctors and their patients will have the benefit of greater security in their insurance arrangements from tomorrow (July 1) following changes to medical indemnity initiated by the Federal Government, the Minister for Revenue and Assistant Treasurer, Senator Helen Coonan, said today.

"From 1 July, doctors will have access to legally enforceable medical indemnity insurance offered by prudentially regulated insurers. Claims will no longer be paid merely at the discretion of doctor run medical defence organisations (MDOs). Medical indemnity insurers will need to meet the same high level of liability recognition and - subject to a five year transition period - capital adequacy requirements as general insurance companies," Senator Coonan said.

"Fourteen months ago, the collapse of UMP demonstrated the dramatic consequences for doctors of an under-funded and unregulated MDO. It exposed thousands of doctors and their patients to the prospect of personal liability and un-met claims," Senator Coonan said.

Senator Coonan said that the Government's comprehensive medical indemnity package not only provides greater safety, but also means that medical indemnity premiums will be more affordable. Taxpayer-funded premium subsidies will assist specialists in high-risk areas to continue providing their valued services to the community.

"The Government has also allayed doctors' concerns about continued indemnity cover after retirement with interim measures now in place and a permanent solution, which will ensure affordability of cover in retirement, to commence on 1 July 2004."

"Doctors concerns about so-called "blue sky" claims have also been addressed by the government assuming liability for 100 per cent of amounts payable over an insured limit of $20 million. Any amounts paid by the government under this arrangement will be recouped later from doctors via their insurers," Senator Coonan said.

"In the long term, State and Territory governments can help to deliver greater stability in medical indemnity premiums through reform of negligence laws based on the blueprint for reform provided by the Federal Government's Ipp Report into these laws."

Senator Coonan said that the Commonwealth and all State and Territory governments had committed to implementing the key recommendations of this report, although the pace of reform has varied between jurisdictions.

"The Federal Government continues to urge all jurisdictions to complete the suite of reforms that will give doctors confidence to continue in practice in the long term to ensure maintenance of the high standards of health care," Senator Coonan said.

"There has been confusion in the move to a new system, but one undeniable fact is that doctors will face less risk from their insurance arrangements after July 1 than ever before."