A review of private hospital regulation could pose problems for insurers that provide indemnity cover, according to the Insurance Council of Australia (ICA).

The move may lead to increased claims and premium costs, CEO Rob Whelan says in a submission to the Department of Health.

Under current rules, when a doctor is investigated by the Australian Health Practitioner Regulation Agency, hospital managers are unlikely to hear about it unless the doctor informs them.

But under new proposals, the agency would be required to tell the hospital when an investigation starts.

“The council is concerned about risk management issues such as what action may be expected of the hospital on receipt of this information or what action subsequent courts may decide should have been taken,” the submission says.

“It is possible that any change in this area will increase medical indemnity exposure under a medical malpractice policy.

“Initially this may have no impact on the insurer’s costs but, over time, if exposure is increased and that is reflected in a deteriorating claims experience, it may mean premium increases.”

ICA has also raised concerns about the introduction of a duty on healthcare practitioners to report colleagues engaging in behaviour such as drug taking, alcohol abuse and sexual misconduct.

“Importantly, a breach of the obligation to report is intended to be categorised as a criminal offence, and will carry criminal penalties.

“If introduced, hospitals and staff may seek indemnity cover with respect to this duty and potential claims or prosecutions that might arise from the new laws.

“The council is concerned that indemnity policies, as drafted, may not provide any meaningful cover [because] they respond to civil liability, not criminal liability, and such cover may not be readily available commercially.”