The Australian Prudential Regulation Authority (APRA) today issued guidelines to bodies corporate seeking transitional capital relief under the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003 (the Medical Indemnity Act).

Under the transitional provisions, 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 1973 (the Insurance Act).  The timing is geared to allow providers adequate time to build-up appropriate levels of capital.  The transitional relief does not extend to other prudential standards.

APRAs Chief Executive Officer, Mr Graeme Thompson said that the regulator had worked extensively with industry and interested stakeholders to ensure that its expectations in relation to granting capital relief are clear. 

APRA has issued three guidelines that are disallowable instruments:

•  Guidelines: Matters to be Included in a Funding Plan
• Guidelines: Certification of Funding Plans by Auditors and Actuaries
• Guidelines: Qualifications and Independence of Auditors and Actuaries 

Mr Thompson said that the regulatory measures imposed by the Act provide patients with more certainty that claims against a medical practitioner for professional negligence or misconduct would be met.  

The measures will also reduce the risk of a significant withdrawal of private health services in circumstances where medical practitioners do not have access to adequate and ongoing medical indemnity cover. 

Commencing 1 July 2003, the Medical Indemnity Act prohibits institutions from providing medical indemnity cover unless the institution is an authorised general insurer under the Insurance Act.  APRA is responsible for administration of the Insurance Act.  

APRA is also developing guidelines to assist with the operation of section 24 of the Medical Indemnity Act in determining a reasonable premium.  It plans to commence consultation on the guidelines with all interested stakeholders in mid June 2003 and expects them to come into effect for the 2004 policy renewal period.

The new guidelines are available on the APRA website at http://www.apra.gov.au/General/Medical-Indemnity-Insurance.cfm.

APRA is the prudential regulator of the financial services industry including banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, friendly societies, and most members of the superannuation industry.  It currently regulates $1.5 trillion in assets for 20 million Australians.