Australian government issues second ACCC medical indemnity report
The Australian government today issued the Australian Competition and Consumer Commission report monitoring medical indemnity insurance premiums, Medical Indemnity Insurance - Second Monitoring Report - December 2004.
The report is the second in a series of three to be produced in response to the Prime Minister's announcement in October 2002 that the ACCC would monitor medical indemnity premiums to assess whether they are actuarially and commercially justified.*
The report shows that the premiums written in 2004-05 (2004 in the case of UMP) were considered to be actuarially justified for all five medical indemnity providers.
The ACCC also found that, in the current market environment, premiums set by all five providers were considered to be commercially justified.
"The ACCC's report shows that the medical indemnity industry is currently in a healthy and viable state, a significant change from two years ago when the largest medical indemnity insurer was in provisional liquidation", ACCC Chairman, Mr Graeme Samuel, said.
Copies of the report will be available on the ACCC's website (see Links below).
*The ACCC's monitoring focused on how premiums were derived by the five medical indemnity insurers from an actuarial and commercial perspective. The five providers include Australasian Medical Insurance Limited, Health Professionals Insurance Australia Pty Ltd, MDA National Insurance Pty Ltd, Medical Insurance Australia Pty Ltd and Professional Indemnity Insurance Company Australia Pty Ltd.
The ACCC's assessment of the actuarial justification of premiums considers the technical actuarial aspects of pricing. It examines the process adopted by medical indemnity providers to derive premium rates, the approach taken to construct those premiums, the level of detail used to support pricing assumptions and the breadth of issues taken into consideration (such as recent medical indemnity and tort law reforms).
The ACCC's review of the commercial justification of premiums considers the ability of medical indemnity providers to meet their commercial obligations to key stakeholders. It assesses the impact on premium rates of APRA's minimum capital regulatory requirements that medical indemnity providers need to achieve to reach a fully capitalised position by 30 June 2008, as well as broader commercial obligations such as solvency targets and emerging surplus levels.
