The Australian Prudential Regulation Authority (APRA) today directed Australasian Medical Insurance Ltd(AMIL) to raise capital by 30 June 2002 sufficient to meet current minimum requirements under the Insurance Act 1973 (the Act).

Following the receipt of new information from AMIL, APRA appointed an Inspector to AMIL on Friday, 22 February 2002, under section 52 of the Act to investigate the insurers soundness, because of a significant deterioration in AMILs financial position since its previous balance date, 30 June 2001.

AMIL is a subsidiary of United Medical Protection Limited (UNITED), a medical defence organisation that provides discretionary indemnity protection to its membership of medical practitioners, including around 90 per cent of doctors in New South Wales and around 60 per cent of doctors Australia-wide.

Because of the nature of its business, the parent UNITED is not itself classified as conducting contractual insurance business under the Act and, accordingly, is neither licensed nor regulated by APRA.

AMIL has suffered a number of adverse external shocks, including:

• changes to NSW health care legislation in 2001, causing a significant spike in claims
  in 2001;
• investment losses and rising reinsurance costs in the aftermath of 11 September 2001;
• the failure of one of its reinsurers (HIH); and
• a withdrawal of reinsurance capacity in global markets.

Accordingly, APRA issued a direction to AMIL today after receiving the necessary approval from the Minister for Revenue and Assistant Treasurer, Senator the Hon Helen Coonan.

AMIL is cooperating fully with APRA to help strengthen its situation in the interests of policyholders.

For further information contact:

Gloria Peterson Public Affairs Manager 02 9210 3385