Medical Indemnity Act 2002

1. IBNR Scheme — Covers claims relating to incidents that happened before 1 July 2002 but were never reported to the MDO at the time. These are "incurred but not reported" liabilities — essentially, unknown debts from the past that could bankrupt an MDO.

2. High Cost Claim Indemnity — When a claim against a doctor exceeds $2 million, the government pays the excess above that threshold. This protects insurers (and therefore doctors) from catastrophic individual claims.

3. Exceptional Claims Indemnity — For claims so large they exceed the doctor's insurance policy limit entirely. The government pays the amount above the policy cap.

4. Run-Off Cover — When a doctor retires, becomes disabled, or dies, they can no longer buy insurance. This scheme covers claims made after they've left practice for incidents that happened while they were practising. This is critically important — a patient can sue years after treatment.

5. Allied Health Schemes — Similar high-cost and exceptional claims support extended to allied health professionals.

Key Rules for Doctors

• If you're in private practice, you need professional indemnity insurance
• If you retire or leave practice, the government's run-off scheme covers you for old claims
• If you work only in public hospitals treating public patients, these schemes largely don't apply to you (the government already indemnifies you through other means)

Recovery Mechanisms

The government doesn't just hand out money — it has mechanisms to get money back:

• If an MDO or insurer receives money from another source after being paid by the government, they must repay the government
• Insurers pay into a run-off cover support payment fund to help finance the ongoing cost of run-off cover
• Late payments attract penalties (interest-like charges)

For Patients

This law doesn't directly give patients rights. But it matters to you because:

• It keeps doctors insured and practising
• If your doctor is sued and their insurer collapses, there's a government backstop so your compensation claim can still be paid
• It encourages continued availability of high-risk services like obstetrics and complex surgery