Australia’s largest medical indemnity insurer hit the wall late yesterday and decided to call in the liquidators. In the angry comments and large headlines that will inevitably follow the collapse of United Medical Protection, two things will have to be spelled out again and again: No doctor will be left uncovered; and like HIH, the collapse doesn’t indicate the outlook for the rest of the medical indemnity industry.

The Government has moved quickly to provide the guarantees necessary to keep the 60% of doctors affected by the collapse completely covered. While its decision to refuse to bail out UMP is hardly surprising, it is anxious to avoid community uncertainty about their doctors. Today the Prime Minister gave his own guarantee that doctors will be covered.

The medical indemnity insurers covering the remaining 40% of doctors can probably expect some new customers, although delays in getting the extra cover sorted out are inevitable. The new premiums for some classes may well be more expensive, if the HIH experience is anything to go by. Flow-ons to the community are likely to attract plenty of attention.

Gary Gribbin, CEO of Melbourne-based Professional Insurance Australia, says this particular insurance crisis “has been all precipitated by UMP”.

He said last week’s National Medical Indemnity Forum in Canberra recognised the parlous state of UMP; but the forum was also emphatic that the issue was “specifically a UMP problem”.

“It’s not an industry-wide problem,” said Mr Gribbin, whose company provides medical indemnity cover. “Despite all the fuss, there is not a systemic failure.”

Assistant Treasurer Helen Coonan said last night the Government will work with the provisional liquidator – who will be appointed next week – to provide short-term claims guarantees as well as cover for doctors until June 30.

“These measures will provide for the protection of medical services in the short term while longer-term solutions to the difficulties faced by medical defence organisations are addressed,” she said.