The Australian Medical Association was quick to warn of chaos after the UMP collapse. From the doctors’ perspective, an expensive rescue by the taxpayer was preferable to the uncertainty of finding new insurers. AMA President Kerryn Phelps has also been at the forefront of the call for some form of protection against small malpractice suits.

It was an attitude that found ready acceptance at last week’s Canberra forum, where health ministers from every state and territory discussed ways of reducing the high level of litigation in medical insurance and encouraging dispute settlement through mediation.

The forum also recommended bringing medical indemnity insurers under APRA supervision, an arrangement that Mr Gribbin said he hoped would have “appropriate transition arrangements”.

“These are needed so the industry can do more to introduce proper regimes of financial reporting and have effective and efficient prudential supervision,” he said.

Solutions to the medical indemnity crisis include such reforms as changing the tax treatment of structured settlements and the introduction of tort reform enabling negligence victims to take tax-free payouts via annual payments. Senator Coonan said the amendments to tax laws aimed to get more victims to take compensation as an annuity rather than a lump sum. 

State governments will also consider establishing benchmark payouts for specific kinds of injuries and reducing the time period over which victims can sue. Currently, claims can be brought up to 21 years after the alleged negligence, making it difficult for medical defence organisations to match their claims to their subscriptions or premiums.

The forum will reconvene on May 29, where the ministers will review progress on the issue.