Understanding professional indemnity insurance for doctors – the Premium Support Scheme explained

The Premium Support Scheme (PSS) assists eligible medical practitioners with the cost of medical indemnity insurance through payment of premium subsidies. Medical practitioners qualify for a premium subsidy under the PSS if they meet one of two criteria:

  1. their annual gross medical indemnity costs exceed 7.5% of their gross private medical income; or
  2. they are a procedural GP practising in a rural or remote area.

Participation in the PSS has steadily declined. Department Of Health statistics show that 4,441 medical practitioners received a premium subsidy in the first year of PSS operation, with participation peaking in 2007-08 with 7,210 medical practitioners participating.  Since then participation has steadily declined with fewer medical practitioners receiving a subsidy each year. In 2015-16, only 1,237 medical practitioners received a PSS subsidy. This represents less than 2% of privately practising medical practitioners.

Two of the six medical indemnity insurers have also chosen not to participate in the PSS given its limited application and high cost of administration.

Despite the small reach of the scheme, the cost to the Commonwealth is reasonably high with the total amount of subsidy paid by the Commonwealth in 2015-16 being $8 million with the average subsidy paid ranging from approximately $560 for non-procedural GPs to $13,500 for obstetricians.

Of the GPs accessing the PSS in 2015-2016, approximately 70% were practising in rural and remote locations.

The PSS contract provides benefits to contracted insurers, and also carries obligations. One of the key benefits is that medical practitioners insured by contracted insurers are able to access the PSS and the insurer is paid an administration fee for assisting in the administration of the subsidy ($1.4 million in 2015-16 across the four contacted insurers).

Obligations imposed via the contract also include universal cover requirements and a requirement for insurers to offer run-off cover at a nominal cost for certain medical practitioners.

Currently, under the PSS, contracted insurers must invite medical practitioners to participate in the PSS prior to the commencement of each policy period. Practitioners may opt in by giving notice each year to their insurer.

Each insurer sends relevant information to DHS (including the anticipated income of the medical practitioner for the subject year), DHS assesses the eligibility of the medical practitioner and calculates the relevant amount of subsidy. DHS makes payment to the insurer for all eligible applications for PSS. The subsidy is passed on to the medical practitioner via a reduced premium. In some cases, the insurer anticipates the payment of the subsidy and offers a reduced premium to the practitioner in advance of acceptance of the claim and payment by DHS.

Medical practitioners must give statutory declarations stating actual gross private income to insurers within 12 months of the end of the premium period and insurers submit relevant data to DHS. If there are any adjustments to subsidy (based on actual income compared to estimated income) insurers return any overpaid PSS subsidy to DHS. If a medical practitioner fails to submit a statutory declaration, the insurer must return the advance subsidy to DHS within 15 months and must seek reimbursement from the medical practitioner.

Source : Medical Indemnity First Principles Review and Thematic Review 2018