As we predicted, there’s been plenty of fallout from the collapse of medical indemnity giant United Medical Protection. With 35,000 medicos on its books in a market where liability is increasingly expensive, insurers haven’t been rushing to scoop the lost doctors up. The issue has caused constant irritation all week to the Government, and again forced it to say tort reform is the states’ problem.

That doesn’t solve the problem of what to do with 35,000 doctors after June 30. Insurers that Assistant Treasurer Helen Coonan said were prepared to step in to replace UMP haven’t so far.

The Government is under increasing pressure to provide a lifeline for the affected doctors, some of whom have already stopped working. In a statement from New York, AM Best said the failure of UMP “leaves a giant hole in Australia’s medical malpractice market”.

AMA President Dr Kerryn Phelps, who has been very vocal with the AMA line that the Government must keep UMP operating, wasn’t exaggerating when she warned that some doctors may not be able to secure insurance after June 30. “Doctors who are not covered and can’t get cover from other [medical defence organisations] are going to find themselves between a rock and a hard place,” she said.

Doctors could also be exposed to huge malpractice claims, as UMP may only be able to pay 5 cents in the dollar for claims of more than $5 million. The failed insurer has a shortfall estimated at up to $500 million.

While the doctors heavy the Government for a better deal, they could possibly contemplate the sort of premiums they will be paying in the future. “If any other insurer does want to get into this market, the premiums will have to be higher,” one industry insider said. “Some specialists are paying premiums of $100,000 and more a year. They’ll be paying more, and the costs will have to be passed on.”

UMPs appointed provisional liquidator is David Lombe, a partner with Deloitte Touche Tohmatsu. He will meet the Government later this week to discuss options to temporarily keep the company afloat.