"The NSW Supreme Court's decision to allow United Medical Protection (UMP) and its subsidiaries to exit provisional liquidation is good news for doctors, patients and the medical indemnity industry," Minister for Revenue and Assistant Treasurer, Senator Helen Coonan said today.
In mid-September the Provisional Liquidator of the UMP group of companies applied to the Court to dismiss the winding up application and approve the exit of United Medical Protection and its subsidiaries from provisional liquidation. UMP currently acts for more than 21,000 Australian doctors.
While the Australian Prudential Regulation Authority (APRA), Australian Securities and Investment Commission (ASIC) and the Commonwealth made submissions to the Court, no objections were made to ending the provisional liquidation.
"UMP's resurrection demonstrates the effectiveness of the Australian Government's assumption of UMP's unfunded liabilities and the guarantee covering UMP/AMIL until December 31, 2003," Senator Coonan said.
"The Government's actions and subsequent requirement for medical indemnity providers to be regulated in the same way as other insurers has brought greater certainty to both doctors and patients and required providers to have enough capital to meet claims.
"Without the Australian Government's indemnity to UMP and provisional liquidator David Lombe's comprehensive restructure of the group, UMP would almost certainly have gone into liquidation, leaving doctors and patients exposed to unfunded claims.
The Government now requires all medical indemnity providers to meet the same provisioning standards and minimum capital adequacy requirements as general insurance companies. Current providers of medical indemnity insurance will have until July 2008 to prove capital adequacy.
By introducing these APRA administered prudential requirements across the entire medical indemnity industry, the Government has addressed the serious risks associated with unregulated and sometimes under-funded medical indemnity providers.
"There were significant risks attached to discretionary cover and while there appeared to be unlimited cover, the previous arrangements for medical defence organisations were unsustainable and did not guarantee that claims would be paid," Senator Coonan said.
"By requiring medical indemnity providers to come under the prudential net, the Government has ensured that doctors and their patients will have increased certainty that claims will ultimately be met."