Commonwealth Numbered Regulations - Explanatory Statements

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MEDICAL INDEMNITY (PRUDENTIAL SUPERVISION AND PRODUCT STANDARDS) AMENDMENT REGULATIONS 2004 (NO. 1) 2004 NO. 81

Subsection 33(1) of the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

The Act, which commenced on 1 July 2003, provides that medical indemnity cover is only to be provided by general insurers and only under contracts of insurance. The intention is to ensure that providers of medical indemnity cover are subject to appropriate prudential supervision by the Australian Prudential Regulation Authority (APRA).

Paragraph 8(2)(e) of the Act provides that the Act does not apply to an arrangement of a kind prescribed by the regulations. Regulation 4 of the Medical Indemnity (Prudential Supervision and Product Standards) Regulations 2003 prescribes arrangements for the purposes of paragraph 8(2)(e) of the Act.

Under the Act, universities and tertiary institutions are prevented from indemnifying health care professionals as they are not general insurers. However, given the definition of `health care professional' in section 4 of the Act, medical or other health care students may be considered `health care professionals' once they enter the practical component of their training.

The purpose of the Regulations is to exempt those universities and non-university tertiary institutions that indemnify their medical or other health care students from the application of the Act.

In general, medical students have been indirectly indemnified through their university's insurance arrangement, which in a large number of cases is provided by a discretionary mutual fund. A discretionary mutual fund is not a general insurer and therefore under the Act is not permitted to write medical indemnity cover for universities that can be extended to students. Given the unique risks and lack of historical data, inquiries indicate that there is at present little capacity for authorised medical indemnity insurers to provide comprehensive medical indemnity cover to students. The Regulations enable a university or training institution to indemnify its students directly, in an arrangement distinct from its own insurance arrangements.

Regulations 1 and 2 set out respectively the name of the Regulation and the commencement date of the Regulation.

Regulation 3 notes that Schedule 1 amends the Medical Indemnity (Prudential Supervision and Product Standards) Regulations 2003. Schedule 1 describes the arrangement to be exempt as one under which medical indemnity cover is provided by an institution that provides healthcare training to a person receiving that training. The exemption applies only in relation to cover for incidents arising from that health care training.

The Regulations commenced on the date of their notification in the Gazette.