24. Gross indemnity costs

(1) Gross indemnity costs means, for a premium period, costs charged to a member, or for which a member is liable, comprising any:

(a) premium; and

(b) membership fees; and

(d) costs payable for retroactive or run-off cover; and

(e) for a member other than a procedural general practitioner in a rural area, 50% of any risk surcharge charged to the member, where the risk surcharge used for this calculation is not to exceed the risk surcharge cap,

but do not include:

(f) GST; or

(g) stamp duty; or

(h) capital calls; or

(i) excess payments or deductibles; or

(j) charges imposed by the contracted insurer on a member for late payment of any of these costs (including the premium); or

(k) costs for previous premium periods except the costs of retroactive cover or run-off cover; or

(l) late payment penalties under the Act; or

(m) for the avoidance of doubt, any amount of premium for a policy that primarily covers the employees of a medical practitioner or an entity that runs a medical practice (being a company, partnership or other entity).

Note The operation of this subsection is qualified in respect of offers to provide medical indemnity cover to a member on or after 1 January 2008 - see section 25A.

(3) If the member’s gross indemnity costs change at any time during the premium period, an adjustment of the amount of subsidy, taking into account change in premium, must be made in accordance with this Scheme.

(4) In this section:

capital calls means a capital contribution required of members under the rules of an MDO;

risk surcharge means any surcharge or loading applied by a contractor to a member’s premium to reflect the prior claims history or other particular circumstances of that member;

risk surcharge cap means an amount that does not exceed the premium, excluding the risk surcharge.