Universal Cover Obligations

This page provides information on the requirements of universal cover obligations for medical indemnity insurers, and information for medical practitioners should a dispute arise between an insurer and a medical practitioner in relation to the universal cover arrangements.

Page last updated: 30 June 2020

The information on this page reflects changes to the medical indemnity legislation commencing 1 July 2020.

Before taking action based on the information provided on this page, you need to consider your own situation and the relevant laws. You should seek advice that takes account of your particular set of circumstances. Check with your medical indemnity insurer if they have additional requirements, which may not be covered here.

The Department of Health makes reasonable efforts to ensure that the information provided on this page is accurate. However, before relying on any information on this page, you should always check that the information is accurate, current, and complete. The Department does not guarantee the accuracy, currency, or completeness of the information on this page. The Department accepts no legal liability for the information on this page.

Universal Cover obligation

The Premium Support Scheme has previously been administered under contract with four major medical indemnity insurers. These contractual arrangements included the obligation to provide universal cover to doctors.

From 1 July 2020, all medical indemnity insurers have universal cover obligations under legislation.

The universal cover obligation requires that all medical indemnity insurers must offer professional indemnity cover to any medical practitioner who seeks it.

It also provides that medical indemnity insurers must not refuse a medical practitioner professional indemnity cover except in circumstances prescribed by law.

The circumstances in which a medical indemnity insurer can refuse to provide medical professional indemnity cover include where:

  • there is an insurance contract between the practitioner and the insurer and:
    • the practitioner failed to comply with the duty of the utmost good faith or the duty of disclosure (within the meaning of the Insurance Contracts Act 1984);
    • the practitioner made a misrepresentation to the insurer during the negotiations for the contract but before it was entered into;
    • the practitioner failed to comply with a provision of the contract, including a provision with respect to payment of the premium; or
    • the practitioner made a fraudulent claim under the contract.
  • the practitioner places the public at risk of substantial harm in the practitioner’s private medical practice because the practitioner has an impairment (within the meaning of the Health Practitioner Regulation National Law);
  • the practitioner’s private medical practice poses an unreasonable risk of substantial harm to the public or patients;
  • the practitioner poses an unreasonable risk of harm to members of the insurer’s staff because of persistent threatening or abusive behaviour towards members of the insurer’s staff;
  • the practitioner has persistently failed to comply with reasonable risk management requirements of the insurer; or

Additional circumstances in which cover may be refused may also be specified in the Medical Indemnity Rules 2020.

Currently, section 14 of the Medical Indemnity Rules 2020 providestwo additional circumstances in which cover may be refused. The circumstances are that the medical practitioner:

  • has practised without being registered or licensed as a medical practitioner under a State or Territory law that provides for the registration or licensing of medical practitioners; or
  • is practising in breach of a limit (however described) on the registration or licensing of the practitioner under a State or Territory law that provides for the registration or licensing of medical practitioners.

Risk surcharge requirements

A medical indemnity insurer may require a medical practitioner to pay, as part of the amount payable for medical indemnity cover provided for the practitioner in relation to the practitioner’s private medical practice, an amount (the risk surcharge):

  • to reflect that, because the practitioner engages, or has engaged, in conduct that deviates from good medical practice, the practitioner’s private medical practice is likely to pose a higher risk to patients than the private medical practice of a comparable medical practitioner; or
  • in circumstances specified in the Medical Indemnity Rules 2020.

The method for working out the maximum amount of risk surcharge an insurer can require a medical practitioner to pay for a premium period is specified in the Medical Indemnity Rules 2020.

Maximum amount of risk surcharge

The maximum amount of risk surcharge is twice the practitioner’s gross indemnity costs (within the meaning in section 6 of the Medical Indemnity Regulations 2020) relating to the contract and the premium period.

This would mean that the insurer could charge a maximum of:

Gross indemnity cost (e.g. $10,000) + risk surcharge of 200% of gross indemnity cost (e.g. $20,000) = $30,000 total including risk surcharge

Gross Indemnity Cost means, for a premium period, costs charged to a medical practitioner including:

  • the premium for the contract, excluding any risk surcharge;
  •  the membership fee (if any); and
  • costs payable by the practitioner for retroactive cover or run-off cover.

Gross Indemnity Cost does not include statutory payments for example, GST, medical indemnity payments (i.e. the ROCS levy paid in accordance with the Medical Indemnity Act 2002 (as per subsection 34(2) of the Medical Indemnity Regulations 2020).

Dispute resolution

If a dispute arises between an insurer and a medical practitioner in relation to the universal cover arrangements, the matter may be referred to the Australian Financial Complaints Authority (AFCA) by the medical practitioner.

If a medical indemnity insurer refuses to offer or renew indemnity cover, or makes an offer that includes a risk surcharge, the insurer must, at the time of notifying the medical practitioner of the refusal or the application of a risk surcharge, also inform the medical practitioner of his or her right to refer the dispute to AFCA.

AFCA’s jurisdiction to consider a complaint in relation to medical indemnity is set out in the AFCA Complaint Resolution Scheme Rules. AFCA Complaint Resolution Scheme Rules.

For more information on AFCA external dispute resolution process, visit the AFCA website.

New annual reporting requirements for insurers

All medical indemnity insurers will also need to comply with and provide an annual report on compliance to the Secretary of the Department of Health. These include new reporting obligations to the Department around:

  • refusal of cover;
  • the application of a risk surcharge to those insureds deemed by a medical indemnity insurer to represent a higher risk compared to their cohort;
  • the number of refusals of cover by a medical indemnity insurer or when a risk surcharge is paid that are the subject of complaints made to the AFCA; and
  • the number of occasions in the financial year where a medical practitioner withdrew from entering into a contract of insurance with a medical indemnity insurer for professional indemnity cover.

Medical indemnity insurers will need to provide this information to the Medical Indemnity Team within the Department (at: [email protected]) no later than 31 August of each year.

Annual Reporting Template (PDF 95 KB)
Annual Reporting Template (Word 18 KB)

The Secretary has a legislative responsibility to publish this information on the Department's website within 3 months after the end of the financial year (no later than 30 September of each year).

The first report will be published by September 2021. These reports will be de-identified and will provide greater transparency in the provision of medical indemnity insurance cover in line with Recommendation 2 of the 2016-17 ANAO Report, The Management, Administration and Monitoring of the Indemnity Insurance Fund.

The reports will be made available on the following page.