22Additional offer of retroactive cover when regulated insurance contract entered into, comes into effect or is renewed

#### 22 Additional offer of retroactive cover when regulated insurance contract entered into, comes into effect or is renewed Offence—compulsory offer (1) A person (the insurer) commits an offence if: (a) a regulated insurance contract is entered into, comes into effect or is renewed; and (b) the insurer provides medical indemnity cover for a health care professional under the regulated insurance contract; and (c) the insurer does not make an offer (the compulsory offer) to the client that satisfies all of the following subparagraphs: (i) the offer is an offer to provide medical indemnity cover for the health care professional in relation to all compensation claims that are made against the health care professional, during a period that includes the whole of the claims period for the regulated insurance contract, in relation to the health care professional’s otherwise uncovered prior incidents; (ii) the offer is made at the same time as the insurer makes the offer or the invitation that leads to the regulated insurance contract or the renewal; (iii) the offer is a complying offer. > Note 1: For complying offer, see section 24. > Note 2: Subparagraph (c)(i)—subsection 4(9) operates on the reference in this subparagraph to the claims being made during a period. Penalty: Imprisonment for 12 months. (1A) In determining whether an offer made by an insurer to provide medical indemnity cover for a health care professional satisfies subparagraph (1)(c)(i), disregard: (a) an otherwise uncovered prior incident of the health care professional; or (b) a compensation claim in relation to an incident of that kind; if it is reasonable and appropriate for the insurer to exclude the incident or claim from the cover being offered, having regard to: (c) the nature of the health care provided by the health care professional during the period during which the otherwise uncovered prior incident occurred; and (d) the kinds of exclusions that are usually provided for in contracts of insurance that provide similar cover to the cover being offered; and (e) any other relevant consideration. (1B) Strict liability applies to subparagraph (1)(c)(iii) to the extent that it relates to whether the premium referred to in paragraph 24(2)(f) is reasonable. > Note: For strict liability, see section 6.1 of the Criminal Code. Offence—entering into regulated insurance contract etc. before response to compulsory offer received (2) A person (the insurer) commits an offence if: (a) a regulated insurance contract is entered into, comes into effect or is renewed; and (b) the insurer provides medical indemnity cover for a health care professional under the regulated insurance contract; and (c) the regulated insurance contract is entered into, comes into effect or is renewed before the client has given the insurer a written response to the compulsory offer; and (d) the medical indemnity cover does not relate to all compensation claims that are made against the health care professional, during a period that includes the whole of the claims period for the regulated insurance contract, in relation to the health care professional’s otherwise uncovered prior incidents. Penalty: Imprisonment for 12 months. Offence—record keeping (3) A person (the insurer) commits an offence if: (a) a regulated insurance contract is entered into, comes into effect or is renewed; and (b) the insurer provides medical indemnity cover for a health care professional under the regulated insurance contract; and (c) the insurer does not keep a copy of the following: (i) the compulsory offer; (ii) if the client gives the insurer a written response to the compulsory offer—that response; (iii) any other offer that the insurer makes to the client, while the compulsory offer is open for acceptance by the client, to provide medical indemnity cover for the health care professional in relation to an otherwise uncovered prior incident of the health care professional; (iv) any invitations that the insurer makes to the client, while the compulsory offer is open for acceptance by the client, to make an offer to enter into a contract of insurance under which the insurer would provide medical indemnity cover for the health care professional in relation to an otherwise uncovered prior incident of the health care professional; for the period of 5 years starting on the day on which the compulsory offer is made. Penalty: Imprisonment for 6 months. Defences for offences against subsections (1), (2) and (3) (4) Subsections (1), (2) and (3) do not apply if: (a) the regulated insurance contract provides medical indemnity cover for the health care professional in relation to all the compensation claims referred to in paragraph (1)(c); or (b) the health care professional has no otherwise uncovered prior incidents; or (c) every health care incident covered by the regulated insurance contract is, or would be, one occurring outside Australia and the external Territories. > Note: A defendant bears an evidential burden in relation to the matter in this subsection (see subsection 13.3(3) of the Criminal Code). (4A) In determining whether a regulated insurance contract provides the cover referred to in paragraph (4)(a) for a health care professional, disregard: (a) an otherwise uncovered prior incident of the health care professional; or (b) a compensation claim in relation to an incident of that kind; if it is reasonable and appropriate for the insurer to exclude the incident or claim from the cover provided by the contract, having regard to: (c) the nature of the health care provided by the health care professional during the period during which the otherwise uncovered prior incident occurred; and (d) the kinds of exclusions that are usually provided for in contracts of insurance that provide similar cover to the cover being offered; and (e) any other relevant consideration. (5) Subsection (1) does not apply if: (a) the insurer makes an offer for the purposes of subsection (1); and (b) the only reason why the offer does not satisfy subparagraph (1)(c)(i) is that the offer does not extend to some of the health care professional’s otherwise uncovered prior incidents; and (c) the insurer has reasonable grounds for believing that the offer does extend to all the health care professional’s otherwise uncovered prior incidents. > Note: A defendant bears an evidential burden in relation to the matter in this subsection (see subsection 13.3(3) of the Criminal Code). Compulsory offer has no effect in certain circumstances (6) A compulsory offer made by an insurer for the purposes of subsection (1) ceases to have effect if the winding up of the insurer starts before the offer is accepted. > Note: An insurer must not carry on insurance business after the winding up of the insurer has started: see section 116 of the Insurance Act 1973. Effect of subsection (1) (7) Subsection (1) has effect subject to section 116 of the Insurance Act 1973. > Note: This means that an insurer does not have to make a compulsory offer for the purposes of subsection (1) once the winding up of the insurer has started.