ACCC not to intervene in Medical Defence merger

27 November 1998
The Australian Competition and Consumer Commission has decided not to intervene in the proposed merger between United Medical Protection and Medical Defence Union Limited (UK).

UMP and MDU UK are involved in the provision of medical indemnity cover for medical practitioners in a number of Australian states. The organisations offer both discretionary (or claims incurred) and insurance products.

In making its decision, the ACCC took into consideration the findings and recommendations of the Tito Report into Compensation and Professional Indemnity in Health Care issued in 1995. Of particular relevance was the recommendation that 'health professional indemnity must be contractually based, not discretionary, and fully funded from premiums collected for this purpose'. In this regard, the ACCC noted that three medical defence organisations are now offering an insurance product to medical practitioners.

The ACCC also noted that commercial insurers are seeking to compete with medical defence organisations by offering a professional indemnity insurance product to medical practitioners throughout Australia.

There was evidence to suggest that medical practitioners are becoming more aware of the different types of professional indemnity cover that are available in the market. Price issues are becoming more relevant for medical practitioners in deciding what type of cover they need as well as from where to obtain such cover.

There also appeared to be significant benefits arising from the merger in terms of the ability of the merged organisation to reduce the overall cost of reinsurance, which is significant factor in determining subscription rates.

The ACCC sought assurances from the merger parties that the accrued benefits of MDU UK members would not be affected by the merger. The ACCC also sought to confirm that there would be no obstacles to members of either organisation switching to competing MDO's or commercial insurers if they chose.

For further information about this media release: Professor Allan Fels, Chairman, ACCC (03) 9290 1812 Ms Lin Enright, Director, Public Relations, (02) 6243 1108 MR 216/98
Release number: 
MR 216/98
ACCC Infocentre: 

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