Medical Indemnity (Prudential Supervision and Product Standards) (Notice of Provision of Run-off Cover) Determination 2020

Run‑off cover is defined in the instrument as medical indemnity cover that meets all the requirements of subsection 26A(4) of the Act. The Act provides that run‑off cover is free or subsidised cover for eligible practitioners who have ceased practice. The instrument tracks this concept by requiring the notice to state the practitioner’s status in relation to run‑off cover: contributing, eligible, eligible and contributing, or inactive (paragraph 6(2)(i)). The notice must also record which of eight statutory classes under subsection 34ZB(2) of the Medical Indemnity Act 2002 applies to the practitioner, including permanent retirement from all practice, permanent disability, death, and temporary visa holders who have ceased Australian practice (paragraph 6(2)(k)). These classes determine eligibility for the premium support scheme and the Act’s free cover provisions.

Associated MDO means a medical defence organisation that had an arrangement with the insurer under which the insurer was obliged to provide medical indemnity cover meeting the requirements of subsection 26A(4) of the Act. This concept is critical because the notice must include cover history from such an MDO as if it were the insurer’s own; the first cover start date includes cover provided by an associated MDO (paragraph 6(2)(g)(iii)), and the last full cover end date may also involve MDO‑provided cover (paragraph 6(2)(h)).

Standard medical indemnity cover means cover provided on the same terms and conditions as the insurer usually offers to other medical practitioners in the same category or class as the practitioner. This definition matters for the notice because the insurer must separately state the amount of premium paid for standard cover (paragraph 6(3)(b)) and any premium paid for additional cover (paragraph 6(3)(c)), plus any loading or discount (paragraphs 6(3)(f) and (g)). The separation of standard from additional cover reflects the policy that the government’s premium support subsidy typically applies only to standard cover, and the notice data helps verify that.

The instrument identifies three levels of cover for run‑off cover purposes (paragraph 6(2)(l)): ROCS Level 1 (private fee‑charging practice - fully indemnified), ROCS Level 2 (public sector cover - fully indemnified), and ROCS Level 3 (other medical practice cover - medico‑legal, gratuitous services, Good Samaritan, and other partial cover). The level determines the scope of indemnity the practitioner receives during the run‑off period.

The notice requires financial data for up to three prior twelve‑month periods before run‑off cover began, but with decreasing detail. For the most recent and second‑last periods, the insurer must state eleven financial and practice items (subsection 6(3)). For the third‑last period, only the year ended and the specialty are required (subsection 6(5)). Critically, under subsection 6(3), “the most recent period … during which medical indemnity cover was provided” excludes any period during which the practitioner was receiving run‑off cover itself. This prevents the notice from using run‑off cover data as a baseline for premium calculations.

Finally, the instrument expressly excludes amounts attributable to GST or stamp duty from the financial items in paragraphs 6(3)(b), (c), (d), (e) and (g) - but those amounts are still captured separately under paragraph 6(3)(h). The insurer must state the sum of all GST and stamp duty amounts paid by the practitioner in relation to the period.

The primary entity with obligations under this instrument is the medical indemnity insurer that provides run‑off cover to a practitioner under subsection 26A(1) or 26C(1) of the Act. The insurer must compile and give the notice to the practitioner (or, if the practitioner has died, presumably to their estate or legal representative). This imposes a recurring compliance burden on every insurer that issues run‑off cover policies. The data collection effort is not trivial: the insurer must maintain records of each practitioner’s cover history extending back at least three twelve‑month periods before the run‑off cover start date, including details such as provider numbers, MDO associations, membership fees, administration fees, discounts, loadings, GST and stamp duty amounts, and whether an excess applied.

Medical practitioners are the subjects of the notice. The instrument describes them as “the practitioner” and acknowledges that they may have ceased to be a medical practitioner by the time the notice is given (Note 2 under subsection 6(1)). Practitioners are affected in that the notice serves as the formal record of their cover status and financial contributions, which may influence their eligibility for premium support or other benefits under the Act. Practitioners do not have a duty under this instrument itself, but they may need to provide historical information to the insurer to enable accurate completion of the notice (for example, the year of first registration, provider numbers, or details of prior cover from another insurer taken over by the current insurer).

Medical defence organisations (MDOs) are indirectly affected. The definition of “associated MDO” means that an insurer must include cover history from an MDO with which it had an arrangement. MDOs may need to share records with insurers to allow the insurer to determine the first cover start date and the last full cover end date, and to identify eligible practitioner status (paragraph 6(2)(j)(iii) refers to status identified on the basis of MDO data). This creates a practical data‑sharing obligation between MDOs and insurers, which may involve cost and coordination issues.

The Department of Health receives the information indirectly, because the notice may be used to verify eligibility for premium support or to reconcile subsidies. The instrument does not require the notice to be sent to the Department, but the Act elsewhere may provide for such transmission. The notice’s data fields are designed to enable the Department to cross‑check subsidy claims.

The Australian Prudential Regulation Authority (APRA), which supervises insurers under the Act, may also have an interest in the accuracy and timeliness of these notices as part of its prudential oversight.

The general public and taxpayers are affected because the data collected through the notice feeds into the administration of the premium support scheme, which is funded by the Commonwealth. More granular data may improve the targeting of subsidies but also increases the administrative cost of the scheme, which is ultimately borne by taxpayers.

The principal duty under this instrument is imposed on the insurer: it must, when providing run‑off cover under subsection 26A(1) or 26C(1) of the Act, give a notice that states all the matters set out in section 6. The notice must be given “for the purposes of subparagraph 26D(2)(b)(iii)” of the Act, meaning that the Act itself likely requires such a notice as part of the insurer’s broader obligations. The instrument fills in the content requirement. The insurer must ensure the notice includes all three categories: general practitioner information (subsection 6(2)), financial data for the most recent pre‑run‑off period (subsection 6(3)), the same financial data for the second‑last pre‑run‑off period (subsection 6(4)), and the year ended and specialty for the third‑last pre‑run‑off period (subsection 6(5)).

The insurer has no discretion to omit items. If a particular item is not applicable (for example, the practitioner has no prior periods because they were never insured before run‑off cover), the insurer must still note that fact; the instrument does not provide a general dispensing power. However, some items are conditional. For example, the “last full cover end date” under paragraph 6(2)(h) is required only “if any” there was such a period. Similarly, the additional cover premium (paragraph 6(3)(c)), membership fees (6(3)(d)), administration fees (6(3)(e)), discount (6(3)(f)), loading (6(3)(g)), and excess (6(3)(i)) are stated only to the extent they exist. The insurer must not omit them if they exist; if they do not exist, the notice should presumably state zero or “not applicable”.

The practitioner has a correlative right to receive the notice. Although the instrument itself does not explicitly state that the practitioner is the recipient, the Act’s context (the notice is given under a provision about “the insurer that … provides medical indemnity cover for the practitioner”) indicates the practitioner is the intended recipient. The practitioner may rely on the notice to understand their cover status, eligibility, and the basis for any premium contributions. The notice also provides historical financial data that the practitioner may need for tax or subsidy purposes.

The practitioner also has a right to have the notice completed accurately. If the insurer omits required information or provides incorrect data, the practitioner may have grounds to seek correction, though the instrument does not create a private right of action. Enforcement would likely occur through the Act’s regulatory provisions.

There is no duty on the practitioner to provide information, but in practice the insurer cannot complete the notice without the practitioner’s cooperation. The practitioner may be contractually obliged under their insurance policy to provide accurate details (such as first registration year, provider numbers, and prior cover history) to enable the insurer to fulfil its statutory obligations. The practitioner’s failure to do so could delay the notice or lead to inaccurate data, which may affect the practitioner’s own entitlements.

The instrument does not create any rights against third parties. The “associated MDO” concept imposes no direct duty on MDOs to provide data to insurers; any such duty would arise from the arrangement between the MDO and the insurer, not from this determination.

The instrument itself does not create any penalty provisions. All enforcement consequences flow from the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003 (the Act), under which this determination is made. The Act includes civil and criminal penalties for failure to comply with its requirements, including the requirement to give a notice containing the prescribed matters. For an insurer that fails to include all required information, or includes false or misleading information, the Act may impose fines, remedial directions, or in serious cases, suspension or cancellation of the insurer’s authority to provide medical indemnity cover.

The Act is administered by the Australian Prudential Regulation Authority (APRA) for prudential supervision aspects, and by the Department of Health for subsidy and product standard aspects. APRA may take enforcement action under the Insurance Act 1973 or its own prudential standards, which incorporate compliance with the Act and its determinations. The Department of Health may seek to recover overpaid subsidies if the notice data reveals inaccuracies in premium support claims.

Because the determination is a legislative instrument registered under the Legislation Act 2003, it is subject to disallowance and review by the Parliament, but that is a political rather than enforcement mechanism.

Practitioners should be aware that inaccurate notices may affect their eligibility for premium support or for the continuation of run‑off cover itself. If the insurer gives a defective notice, the practitioner may need to seek correction to avoid adverse consequences. However, the instrument does not provide a direct avenue for the practitioner to challenge the notice; any challenge would need to be brought under the Act or general administrative law.

The repeal of the 2007 determination and its replacement with the 2020 instrument does not in itself trigger any retrospective penalty. The 2020 instrument applies from 1 July 2020. Notices given after that date must comply with the new requirements. Insurers that continue to use the old form after that date likely breach the Act.

The instrument is part of a statutory framework centred on the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003 (the Act). It is made under subparagraph 26D(2)(b)(iii) of that Act, which empowers the Minister to determine matters to be stated in a notice about run‑off cover. The Act itself governs the provision of run‑off cover, the prudential supervision of medical indemnity insurers, and the setting of product standards. The instrument fills a procedural gap by specifying the notice’s content.

The instrument frequently cross‑references the Medical Indemnity Act 2002. That Act defines key terms used here, including “private medical practice” (defined in the Medical Indemnity Act 2002 and adopted by the instrument). Paragraph 6(2)(k) of the instrument lists eight situational descriptions that are expressly “based on the classes of persons to whom subsection 34ZB(2) of the Medical Indemnity Act 2002 applies”. This means that the notice’s classification of the practitioner’s situation must align with the categories already established under the premium support scheme in the 2002 Act. Any inconsistency between the two Acts could cause confusion; the instrument attempts to harmonise them by importing the categories directly.

The instrument also interacts with the Medical Indemnity Regulations 2020. Paragraph 6(3)(a) of the instrument requires the notice to include any subsidy paid to an insurer or MDO on behalf of the practitioner under the Premium Support Scheme 2004 or Part 6 of those Regulations. This means the notice must capture government subsidies, not just private payments. Insurers must have systems to identify which portions of the total amount paid to them were subsidies.

The A New Tax System (Goods and Services Tax) Act 1999 is referenced through the definition of “GST”, and paragraph 6(3)(h) requires the notice to state the sum of amounts attributable to GST on any supply made by an insurer for which an amount paid for medical indemnity cover was consideration. This ensures that the notice distinguishes the GST component from the premium amount, which is important for subsidy calculations because the government does not subsidise GST.

The Migration Act 1958 appears in paragraph 6(2)(k)(viii), which describes a practitioner who held a temporary visa that permitted medical practice. The notice must identify such practitioners because they may be eligible for run‑off cover only if they have permanently ceased medical practice in Australia and no longer reside here. The notice’s classification thus depends on immigration status.

State stamp duty laws are indirectly engaged. Paragraph 6(3)(h)(ii) requires the notice to state amounts of stamp duty paid under state or territory law in connection with medical indemnity cover. Insurers must collect and report stamp duty information, which varies across states, increasing compliance complexity.

Finally, the instrument interacts with privacy laws, including the Privacy Act 1988 (Cth). The notice collects a wide range of personal information: gender, date of birth, provider numbers, place of practice, medical indemnity history, and financial details. Insurers must ensure they have lawful grounds to collect, use and disclose this information. The instrument itself likely provides authorisation for the insurer to collect these particulars for the purpose of complying with the Act, but insurers must still manage the information in accordance with Australian Privacy Principles (APPs), including ensuring data accuracy and security.

The instrument has one major amendment history event: it repeals and replaces the Medical Indemnity (Prudential Supervision and Product Standards - Notice of Provision of Run‑off Cover) Determination 2007. The 2007 determination was the first instrument made under subparagraph 26D(2)(b)(iii) of the Act. It was registered on the Federal Register of Legislation and came into effect on a date tied to amendments to the Act that introduced the notice requirement. The 2020 determination entirely revokes the 2007 determination via Schedule 1.

The 2020 determination was made by the then Minister for Health, Greg Hunt, on 6 April 2020, and commenced on 1 July 2020. There is no indication in the source text of any subsequent amendments to this instrument. However, because legislative instruments are often amended by later determinations, readers should check the Federal Register of Legislation for any amendments made after the source text was published.

The instrument does not contain a transitional provision. It applies to all notices given after its commencement, regardless of when the run‑off cover began or when the practitioner ceased practice. This means insurers must update their templates and data systems to accommodate the expanded fields, including for practitioners who had already received run‑off cover before 1 July 2020 but who may be receiving a new or updated notice after that date. The repeal of the 2007 determination means the old notice form is no longer valid; using it after 1 July 2020 risks non‑compliance with the Act.

The source text does not mention any litigation or court cases. There is no reference to any challenge to the instrument itself or to its predecessor (the 2007 determination). Because this is a procedural determination that merely prescribes notice content, it is unlikely to have been the subject of direct litigation. However, the broader Act under which it is made has generated some judicial consideration, including cases on the meaning of “medical indemnity cover” and the eligibility for run‑off cover. But the instrument itself has not been litigated, based on the source material.

Insurers should be aware that errors in the notice could give rise to disputes. If a practitioner receives an inaccurate notice and suffers financial loss (for example, loss of premium support due to incorrect data), they may seek judicial review under the Administrative Decisions (Judicial Review) Act 1977 or bring an action for breach of statutory duty. The instrument’s detailed specifications make it easier for a court to determine whether the insurer has complied. However, no such cases have been reported or are referenced in the instrument.

Several points in the instrument could trap insurers or practitioners if not carefully understood.

Definition of “paid by” includes paid on behalf of. Under subsection 5(1), “paid by includes paid on behalf of”. This means that any government subsidy paid directly to the insurer or MDO on the practitioner’s behalf is treated as though the practitioner paid it. The notice must include that amount in the total amount paid under paragraph 6(3)(a). Insurers must ensure their systems capture subsidies as payments by the practitioner, not just payments from the practitioner personally.

Exclusion of run‑off cover periods from “most recent period”. Subsection 5(3) provides that a reference to the most recent period during which the practitioner was provided with medical indemnity cover does not include any period during which the practitioner was provided with run‑off cover under subsection 26A(1) or 26C(1) of the Act. This prevents the notice from using the run‑off cover period itself as the baseline. The “most recent period” is therefore always a period of full‑premium‑paying cover before run‑off began. This is important for the financial data, because the premiums and fees stated will be the last ones the practitioner actually paid, not the subsidised run‑off rate.

Three prior periods, but with decreasing data. Subsection 6(3) requires eleven financial and practice items for the most recent period; subsection 6(4) requires the same eleven items for the second‑last period; but subsection 6(5) requires only the year ended and the specialty for the third‑last period. This means the insurer needs full records for at least two years before run‑off, but only minimal data for a third year. Insurers may need to decide how far back to keep detailed records. If the practitioner had cover for only two years before run‑off, the third‑last period may not exist; the instrument should be read to require data only to the extent it exists.

GST and stamp duty are excluded from some items but included separately. Under subsection 5(2), references to amounts in paragraphs 6(3)(b), (c), (d), (e) and (g) do not include GST or stamp duty. Those amounts are instead captured in paragraph 6(3)(h) as a separate total. This means insurers must separate the GST and stamp duty components from the premium and fee amounts. Failure to do so will result in incorrect data. The separation is necessary because the government does not subsidise GST, and stamp duty varies by state.

Gender, date of birth, provider number, and place of practice are mandatory. Paragraph 6(2)(a) requires the practitioner’s gender. This may raise privacy concerns, particularly for practitioners who identify as non‑binary or who have changed gender. The instrument does not provide for any alternative or for a “not stated” option. Insurers must collect this data even if the practitioner is reluctant to provide it. Similarly, the provider number (subparagraph 6(2)(d)) is “the most recent provider number as provided by the practitioner to the insurer”. If the practitioner has not provided a provider number, the insurer cannot state it; the notice may then be incomplete. Practitioners should be aware that failure to provide a provider number may cause delay.

Status descriptions may change over time. Paragraph 6(2)(i) requires the notice to state whether the practitioner is “contributing”, “eligible”, “eligible and contributing”, or “inactive”. These statuses are dynamic; a practitioner might be “eligible and contributing” at one point and “inactive” later. The notice must reflect the status at the time it is given, not at the time run‑off cover started. Insurers should verify the current status before issuing the notice.

The “last full cover end date” may not exist. Paragraph 6(2)(h) requires the day on which the most recent period of full‑premium‑paying cover ended, but “(if any)” indicates it may not exist. For example, a practitioner who has never paid a premium because they were always covered by an MDO arrangement or by the government may have no “last full cover end date”. The insurer must then state that there is no such period, rather than omitting the item or leaving it blank.

The temporary visa category is narrow. Paragraph 6(2)(k)(viii) applies only to practitioners who held a temporary visa that permitted medical practice in Australia, who have permanently ceased medical practice in Australia, and who no longer reside in Australia. A practitioner who still resides in Australia is not eligible for this category, even if they have ceased practice. Insurers must verify the practitioner’s current residence.

MDO data is used to identify eligibility. Paragraph 6(2)(j)(iii) allows the insurer to state that the practitioner’s eligibility status has been identified “on the basis of MDO data”. This implies the insurer may rely on data from an associated MDO without independently verifying it. If the MDO data is inaccurate, the practitioner may be misclassified. Insurers should document their reliance on MDO data and consider including disclaimers or cross‑checks.

No grace period or waiver provision. The instrument contains no provision allowing the insurer to omit a required item even if it is not reasonably available. Insurers must make reasonable efforts to obtain all data. If an item cannot be obtained, the insurer may need to take legal advice on whether the notice can be given with a qualification or whether the notice is invalid. This is a significant compliance risk.

An insurer providing run‑off cover must take the following steps to comply with this determination.

1. Identify the trigger. The obligation to give a notice arises when the insurer provides run‑off cover under subsection 26A(1) or 26C(1) of the Act. The insurer must determine whether the cover it is providing falls within these provisions. If it does, the notice must be given. The instrument does not specify a timeframe for giving the notice; that is set by the Act. The insurer should check the Act for any deadline.

2. Collect general data (subsection 6(2)). The insurer must have on record the practitioner’s gender, date of birth, year of first registration or licensing, most recent provider number, principal place of practice (state, territory or foreign country) from the most recent contract, the insurer’s own unique identifier for the practitioner, the first cover start date (including from any taken‑over insurer or associated MDO), the last full cover end date (if any), the practitioner’s current run‑off cover status, the best description of their current situation (e.g., contract made, claim lodged, MDO data identified, eligible but no contract), the applicable class under section 34ZB(2) of the Medical Indemnity Act 2002, the level of run‑off cover (ROCS Level 1, 2 or 3), and, if the insurer ceased to provide medical indemnity cover for payment in relation to certain periods, the day coverage ceased.

3. Collect financial data for the three most recent pre‑run‑off periods. For the most recent and second‑last twelve‑month periods before run‑off cover began (and excluding any run‑off cover periods), the insurer must state: the total amount paid by or on behalf of the practitioner (including any subsidies); the premium paid for standard medical indemnity cover; any additional cover premium; membership fees paid to the insurer or an MDO; administration fees separately identified in invoices; any discount given; any loading; the sum of GST and stamp duty amounts; whether an excess was required; the year the period ended; and the specialty. For the third‑last period, only the year ended and the specialty are required. The insurer must ensure it has records going back up to three years before run‑off cover.

4. Exclude run‑off cover periods from the financial data. Section 5(3) makes clear that the “most recent period” for financial data does not include any period during which the practitioner was already receiving run‑off cover. The financial data must therefore relate to the last full‑premium‑paying periods before the run‑off cover started. If the practitioner had only one such period, only that period and the third‑last period need to be reported; data for the second‑last period may be omitted if it does not exist.

5. Ensure accurate separation of GST and stamp duty. The insurer must calculate the amounts of GST and stamp duty included in the practitioner’s payments and state them separately under paragraph 6(3)(h). The premium and fee amounts in other paragraphs must be stated exclusive of GST and stamp duty (subsection 5(2)). This may require changes to billing and invoicing systems to clearly identify GST and stamp duty components.

6. Include MDO data where relevant. If the practitioner has an associated MDO, the insurer must include cover history from that MDO in calculating the first cover start date and the last full cover end date. The insurer should have a process to request and verify MDO data. The presence of MDO data may also affect the status description under paragraph 6(2)(j)(iii).

7. Update notice templates and systems. Insurers must replace any templates based on the 2007 determination with templates that incorporate all the fields required by the 2020 instrument. This includes adding fields for the second‑last and third‑last period financial data, the GST/stamp duty total, the MDO data fields, and the expanded set of practitioner situation categories.

8. Maintain records. The insurer must retain the underlying data for at least the period required by the Act or by general record‑keeping obligations. The financial data for the third‑last period may be particularly hard to retrieve if the insurer did not previously retain it. Insurers should consider proactively collecting data for all periods for which they may later need to produce a notice.

9. Train staff. Staff responsible for issuing run‑off cover notices must understand the definitions and exclusions, including the exclusion of run‑off cover periods from financial data, the treatment of GST and stamp duty, and the need to capture subsidies as payments by the practitioner.

10. Monitor for amendments. This instrument may be amended or replaced by future determinations. Insurers should monitor the Federal Register of Legislation for any changes and adjust compliance processes accordingly.

By following these steps, an insurer can reasonably discharge its duty to give a compliant notice. The cost of compliance should be weighed against the risk of penalties under the Act for giving an incomplete or defective notice.