Medical indemnity insurance in Australia

Abstract

The last 20 years have been turbulent for the medical indemnity insurance industry in Australia. Beginning in the 1980s, claims numbers and settlement costs progressively increased to such an extent that, by the late 1990s, questions were being asked about the future affordability and availability of medical indemnity insurance. These developments were compounded by the subsequent failure of the general insurer, HIH; the financial difficulties experienced by United Medical Protection; and its decision to go into provisional liquidation. This led to the so-called medical indemnity “crisis.” The Commonwealth and state governments responded with a series of legislative changes which included dictating that insurance could only be provided by a registered insurer and then only as an insurance contract. Other changes included reforms to the laws of negligence and subsidies for the medical indemnity organizations, in the form of premium and claims settlement subsidies and numerous others. The medical profession responded by expanding its ongoing educational activities, and clinical risk management activities were promoted by the medical indemnity insurers. Since the introduction of these reforms, approximately 10 years ago, there has been a reduction in medical negligence claims, medical indemnity premiums, and the development of a financially strong medical indemnity industry. The future is bright, but the marketplace is constantly changing with new challenges to be addressed.