The Medical Indemnity (Prudential Supervision and Product Standards) Act 2003 (the Medical Indemnity Act), commencing on 1 July 2003, prohibits institutions from providing medical indemnity cover unless the institution is an authorised general insurer under the Insurance Act 1973 (the Insurance Act).
APRA is responsible for the administration of the Insurance Act. The Medical Indemnity Act also makes provision for minimum product standards for medical indemnity contracts – supervisory responsibility for these lies with the Australian Securities and Investments Commission.
Transitional provisions apply under the Medical Indemnity Act so that institutions wishing to provide medical indemnity cover will have up to five years to comply with the minimum capital requirements imposed by prudential standards made under the Insurance Act. This is intended to allow certain medical indemnity providers to reach appropriate levels of prudential capital over time, given the industry has generally not previously been subject to prudential supervision. Transitional relief does not extend to other prudential standards.
To facilitate these transitional provisions, APRA has issued three guidelines: