Assistant Treasurer Helen Coonan will use today’s national summit on medical indemnity to call for tougher prudential regulation for Australia’s medical defence organisations. MDOs are currently structured in a way that allows them to avoid APRA regulation, and Senator Coonan is expected to present plans that would bring them under the industry watchdog’s power.

The summit, to be held in Canberra, will be chaired by Health Minister Kay Patterson and will address some of the key issues raised at the recent public liability summit, such as structured settlements and tort law reform.

The fear of another HIH-type collapse in medical indemnity was sparked when United Medical Protection (UMP), the insurer of 90% of doctors in NSW and 60% nationally, was unable to meet its June 30 prudential requirements. The fact that the insurers of the remaining 40% were doing just fine was lost in the static of UMP and Australian Medical Association lobbying.

Although the Federal Government stepped with a $35 million guarantee to prevent UMP from falling over, concerns remain about its long-term viability. None of the other medical indemnity insurers are known to be planning to ask for Government handouts. In fact, as Professional Insurance Australia Chairman Garry Gilbert said last week, there is no crisis in a third of the industry.

Meanwhile, Australia’s fourth-largest medical indemnity insurer, the Medical Defence Association of South Australia, has suggested a risk management program for medical practitioners, drawing on actions taken in the US to combat the soaring costs of medical indemnity insurance.

MDSA Chairman Jill Maxwell says the program gives an opportunity for doctors to better communicate with patients and reduce their own costs as well as the incidence of negligence against them.

“The US experience shows that a comprehensive risk management program decreases claims, contains the cost of insurance, reduces the impact of the claims process on doctors and increases the focus on the quality of patient care.”