The Minister for Health and Ageing, Tony Abbott, and the Minister for Revenue and Assistant Treasurer, Mal Brough, today announced they have asked Mr Graham Rogers to lead the independent review of competitive neutrality in the medical indemnity insurance market.
Mr Rogers was president of the Institute of Actuaries of Australia in 2004 and is a Deputy Commissioner of the Private Health Insurance Administration Council. He has a number of current directorships and has advised a range of businesses both in Australia and internationally on strategic development issues.
"Mr Rogers will examine the source and extent of competitive advantages in the industry that may arise from Government assistance, to identify and evaluate options to restore competitive neutrality if necessary," Mr Abbott said. "He will report to the Government before mid March 2005."
"Lower insurance costs are good news. They suggest that tort law reform—and the Government's other medical indemnity reforms—may be improving the availability and affordability of medical indemnity insurance. However, the inquiry will ensure that all medical indemnity providers are operating on a level playing field," Mr Brough said.
The independent review will provide an opportunity for interested parties to formally present their views and will facilitate a thorough, considered response to this issue.
ATTACHMENT
TERMS OF REFERENCE
Background to the inquiry
Some medical indemnity providers have expressed concerns about competitive neutrality in the medical indemnity market resulting from Government assistance provided to the industry in recent years. It is an essential principle that Government assistance not be used to provide a competitive advantage within an industry. The Government has decided to commission a review by a suitably qualified independent person to examine the concerns expressed.
Scope
The inquiry shall examine the source and extent of any competitive advantages in the medical indemnity industry arising from measures undertaken by the Australian Government specifically to assist medical indemnity providers since 29April 2002.
The inquiry shall analyse:
- each form of Government assistance, and their interactions, in assessing implications for competitive neutrality in the medical indemnity market; and
- any resulting competitive advantages, including but not limited to such possible advantages as savings on reinsurance or capital-servicing costs.
(The analysis should consider each medical indemnity insurer individually, its parent or related medical defence organisation, and also each medical indemnity group as a whole.)
Should any competitive advantage to one or more medical indemnity providers be determined, the inquiry shall identify and evaluate options to restore competitive neutrality. The evaluation of such options shall have regard to the Government's general policy aim of ensuring a viable, affordable, fair and competitive medical indemnity market, recognising the interests of all stakeholders - insurers, doctors, patients and taxpayers.
For the purposes of the inquiry, competitive neutrality requires that a medical indemnity provider does not enjoy a net advantage over competitors arising primarily from assistance provided by the Australian Government specifically to medical indemnity providers since 29 April 2002.
The principle of competitive neutrality does not extend to advantages arising from factors such as business size, skills, location or customer loyalty and how these factors might interact with Government assistance schemes available to all medical indemnity providers.
The inquiry will report to the Government through the Minister for Health and Ageing and the Minister for Revenue and Assistant Treasurer by 15 March 2005.