Health Department medical indemnity schemes, set up to facilitate affordable cover, are important and should continue, the Insurance Council of Australia (ICA) says.

But such schemes must not diminish the role of premiums in discouraging risky behaviour, it warns.

ICA says a government review should look at Premium Support Scheme (PSS) universal cover requirements, which ensure practitioners can work in higher-risk areas, but which can also see insurance offered to certain practitioners assessed as extreme or uninsurable risks.

“If the government decides universal cover should be retained the existing requirements should be adjusted to ensure any impact on the community safety is minimised,” it says in a submission on the schemes.

“Requirements around minimum cover, clinical risk mitigants and premium pricing need to be carefully calibrated to ensure some form of effective risk signalling in the market for medical indemnity insurance.”

ICA also says legislation underpinning the Indemnity Insurance Fund (IIF) and associated schemes should be simpler and objectives more clearly articulated and understood.

The Health Department has released a consultation paper on the future of the schemes, set up after Australia’s largest medical defence organisation, United Medical Protection, went into provisional liquidation in 2002.

Insurance availability was also affected by the HIH collapse and the World Trade Centre attacks in 2001, as well as court-awarded damages.

ICA says the IIF and Premium Support Scheme help provide affordable premiums for doctors practising in specialties such as obstetrics, or in rural and remote areas, and are critical in maintaining medical indemnity market stability.

The submission also supports continuation of the High Cost Claims Scheme, the Exceptional Claims Scheme and Run-Off Cover Scheme.

But it calls for greater legislative clarity over which matters fall within the scope of the High Cost Claims Scheme, and says the recovery process for schemes is “extremely onerous”.

The 5% levy on premium income is also too high for the Run-Off Cover Scheme, it says.