Subjects: medical indemnity insurance; interest rates; Telstra; stem cell research; economy.
E&OE...........
PRIME MINISTER:
Well ladies and gentlemen, today I want to announce a substantial enhancement to the Government';s interim guarantee from the 29th April to the 30th of June in relation to medical indemnity insurance, including a six month extension of part of the guarantee. I also want to announce a scheme to provide doctors with certainty in relation to future claims arising from past incidents. These are known as incurred but not reported liabilities, or IBNRs, and also I announce thirdly a road map or longer term strategy for ensuring that the medical indemnity insurance industry is commercially sustainable as it goes forward.
The second and third elements of the package are aimed at ensuring that medical indemnity insurance is commercially viable going forward to provide all doctors, not just those insured under UMP/AMIL, with greater certainty about the viability of the medical indemnity arrangements over the longer term. These measures that are announced today will, I believe, go a long way to addressing the concerns of both doctors and patients.
You';ll be aware of that on the 29th of April the Government announced a short term guarantee to allow members of UMP/AMIL to continue practicing following the decision by the boards of those two groups to appoint a provisional liquidator. The aim of the initial guarantee to the provisional liquidator was to stabilise the situation until the 30th of June and allow doctors to continue practising while longer term solutions were developed. The packages of measures announced today is a big step towards implementing a realistic, long term solution to the many issues surrounding medical indemnity. It extends the guarantee offer on a claims made basis and in doing that the Government is normalising insurance arrangements for medical practitioners insured with UMP/AMIL.
Doctors insurance will continue after the 30th of June on the same basis as applied before UMP/AMIL went into provisional liquidation. The enhanced guarantee will enable the provisional liquidator to meet claims notified in the period 29th of April to the 31st of December 2002 under an existing or renewed claims made policy. It will enable him to renew policy on a claims made basis for the period until the 31st of December 2002 and also continue to meet claims that were notified before the 29th of April 2002 and are properly payable in the period 1 July 2002 to the 31st of December this year. This is an extension of the existing guarantee that was accepted by the New South Wales Supreme Court last week.
My announcement today is also aimed at addressing UMP/AMIL';s and other medical defence organisations'; tails of IBNRs, which is the tail, the big problem about which the doctors and others have spoken in recent days and also improving the financial viability of the medical indemnity insurance industry going forward.
The Government will underwrite all IBNRs where they have not been adequately provisioned for, where they have not been adequately provisioned for, and recoup this liability from members of the relevant medical defence organisations over an extended time frame. The IBNR scheme will provide certainty to members that future claims relating to past incidents will be funded. I repeat that, that future claims relating to past incidents will be funded. All medical defence organisations will be required to participate to the extent that they have unfunded IBNRs. The levy arrangement will enable doctors to meet the cost of the IBNRs over a manageable timeframe. In other words the cost that they might need to recoup will be stretched over a manageable period of time.
The scheme will be funded by a levy on medical practitioners in those medical defence organisations that have IBNRs. Details of the levy arrangements will be developed in consultation with affected medical practitioners, and the medical defence organisations with the aim that levies will be affordable with amounts funded over at least five years. In other words it';s not a sudden death levy and medical practitioners will contribute to the funding of unfunded IBNRs in their particular medical defence organisations. And that means that if an individual doctor belongs to a medical defence organisation that doesn';t have any unfunded IBNRs, then that doctor won';t have to pay the levy. In other words you only have to pay the levy if you';re part of a medical defence organisation that has an unfunded IBNR.
The longer term strategy that I';m outlining today is designed to improve the financial viability of the medical indemnity insurance industry going forward. It';s based on a belief that unless medical indemnity insurance can be made a viable commercial product, practitioners will not have the certainty they need to go on practising. The Commonwealth will continue to consult the states, doctors and the insurance industry as to the best way to implement the Government';s longer term strategy for medical indemnity insurance. We ask all parties to work with us and each other to get a viable long term solution.
It';s the Government';s firm intention that a new comprehensive framework will be in place before the 31st of December this year. And key elements of that longer strategy are better clinical risk management to prevent injuries and accidents, seeking abolition of the premium caps in New South Wales which prevent medical defence organisations from pricing their insurance according to the risk being covered. The Commonwealth, in this connection, in this connection, is developing alternative arrangements to ensure that premiums are affordable for higher risk specialities such as neurosurgeons, obstetricians, and GP obstetricians including, importantly, consideration of direct financial support. A range of measures also to deal with the more serious higher cost claims and improving transparency in the financial reporting of MDOs and bringing them under APRA';s financial framework.
I welcome the outcome of the meeting on public liability insurance held in Melbourne yesterday, including in particular the references to tort law reform, removing barriers to structured settlements as an alternative to lump-sum payments, the better claims handling and the pre-litigation resolution of claims. I also welcome the fact that the States have agreed to study as a matter of urgency the notion that I advanced, I advanced in Canberra in Tuesday night, of in effect taking certain not for profit activities right out of the law of negligence. And in effect saying that if you engage in an activity of this kind and if something goes wrong, unless it is the result of an intentional tort then there can';t be any claim for damages. Do you have any questions?
JOURNALIST:
How much has this cost the Government?
PRIME MINISTER:
It';s impossible to put an exact figure on it because we don';t exactly know the full extent of IBNRs but it';s certainly going to be stretched out over a period of time. It represents a sensible balance between the need to provide stability, predictability, assurance and guarantees for the medical profession, to apply appropriate pressure for reforms that will alter the structural climate under which litigation is conducted in the future. But it also recognises that over an extended period of time doctors who are the beneficiaries of this underwriting will have to make a contribution to the cost of it.
JOURNALIST:
But how much have you budgeted for? I mean is it…
PRIME MINISTER:
Well we don';t have any particular provision here because we don';t believe it';s going to have an impact on the cash balance.
JOURNALIST:
But it';s costing $20 million dollars over two months, so we';ll assume from that…
PRIME MINISTER:
No you can';t automatically assume from that because the way in which this has been structured means that the assets of the company will be available. One of the great virtues of this new arrangement is that we';ll be able to keep insurance going, the company will be able to write new business and that';s very important.
JOURNALIST:
Can I ask about the interest rate this morning? The Reserve Bank suggested that over coming years they';ve indicated the official interest rate rise might be as much as two percent.
PRIME MINISTER:
I haven';t seen that.
JOURNALIST:
[inaudible]
PRIME MINISTER:
Well I haven';t seen it so I';m not going to comment.
JOURNALIST:
[inaudible]
PRIME MINISTER:
I';d be interested in talking to Senator Brown about the circumstances under which the Greens might support at some time in the future a further sale of shares in Telstra. I should make it clear that our election commitment holds. That is until services in the bush are up to scratch there';ll be no further shares in Telstra sold. I';ll listen to what the Greens have got to say. We won';t compromise sensible environmental policy but I';m interested that Senator Brown is at least thinking about it. If he';s come to the conclusion that there';s no going back. Nobody is arguing that there should be a renationalisation of 49% of Telstra. So at some time in the future, after the bush has been properly cared for I stress, some time in the future the only way to go is a futher privatisation. I recognise that at least he';s displaying a little more realism than the Labor Party but as to whether what he might want is something that we could agree to until I know what it is I can';t say. I do indicate that I will be happy to talk to him at some time but we don';t have any plans next week or next month to put further shares up for sale. We still have a few things to do in the bush although things in the bush are getting better. There';s no doubt about that. Things in the bush are looking up and we';re getting a bit closer to the scratch.
JOURNALIST:
[inaudible]
PRIME MINISTER:
I';m not going to get into the area of speculation.
JOURNALIST:
The Catholic Church has criticised your funding for stem cell research saying its pre-empting the actual legislation [inaudible]
PRIME MINISTER:
Well it';s a statement made by, Professor Neville isn';t it, on behalf of the Bishop';s Conference.
I';ve got a couple of comments to make. The first is that it';s not pre-empting anything. This is funding for a centre of excellence that was foreshadowed in the Backing Australia';s Ability statement I made at the beginning of last year. The selection of the stem-cell research group headed by Professor Trounson, the selection of that group was made by an independent committee of eminent scientists chaired by businessmen Dr Peter Johnson and the Government accepted the committee';s recommendation. What I believe has been missed by Dr Neville and by many others is that this group is going to research not only embryonic cells but also adult stem-cells. So a lot of the activity, I can';t tell you what the proportions are, but at least some of the activity is in the area of adult stem-cell research that I know the Catholic Church and others have been strongly supportive of. I always listen to the views of the Catholic Church on these matters. I agree with them sometimes and sometimes I don';t. As you all know I spent quite a lot of time consulting church leaders before the decision was taken. My view is that the decision taken by all the governments of Australia which will guide the operation of this new Centre of Excellence, that decision was the right decision and I stand by it.
JOURNALIST:
Are you confident [inaudible]
PRIME MINISTER:
Look I don';t know. I don';t presume to give advice on the range of views within the Catholic Church. I deal with the Church as I should. It';s an important part of Australian society, a very important part, and I listen to its views and I often agree with them, quite often. But on this occasion I have a slightly different view from apparently the view of the Bishop';s conference.
JOURNALIST:
Prime Minister do you know if the measures you have announced today will be enough to keep the Family Planning Association here in New South Wales operating ?
PRIME MINISTER:
My understanding is that the Family Planning Association has a problem with public liability insurance and this is not public liability insurance. I mean the ultimate responsibility for the law affecting public liability insurance in New South Wales is of course at a state level. I';m not seeking to sort of point a finger at the state government. This is an issue where governments have got to work together but I';m talking here about medical indemnity insurance. That only incidentally relates to the issue of public liability.
JOURNALIST:
[inaudible] also suggested this morning that…
PRIME MINISTER:
Who was this?
JOURNALIST:
[inaudible]
PRIME MINISTER:
Well I haven';t seen…..I';ve been at a funeral, I mean at a memorial service so I haven';t had a chance of examining what his evidence is.
JOURNALIST:
Prime Minister on UMP, is this the deal that you are confident will placate doctors?
PRIME MINISTER:
Well, we do things that we think are right. Sometimes they are satisfactory to everybody, sometimes they';re not. The question I have to ask myself is is this a fair response to the problem, does it reasonably meet the legitimate expectations of doctors, does it look after patients, does it provide a basis on which insurers in this area can go forward. The answer to all of those questions is yes. There may be some doctors who don';t think it goes far enough but they may not be reasonable in thinking that. I believe that this is a fair package and I would hope that the majority of doctors would see that we are picking up a problem which is not of our making. We are providing a short term guarantee which stabilises the situation and allows business to go forward. We are providing a longer term road map in relation to the tail which has been the subject of all the expressions of concern. We';re going to underwrite that but we';re going to ask for a recoupment of the cost of that underwriting over an extended period of time from doctors and that';s only reasonable because we';re using taxpayers'; money and we';re exposing taxpayers'; money to risk. And we';re also providing a road map for restructuring that will allow a stable insurance industry to continue into the future. Now that to me is a very comprehensive response to a difficult problem and I would ask those affected to consider it in a fair minded fashion and to recognise that we can';t sign a blank cheque for this section of the community nor indeed for any section of the community and I think we';ve got the balance right. Thank you.
[Ends]