Health Care Liability Act 2001 INSURANCE APPROVAL ORDER 2001 - Made under the Health Care Liability Act 2001 - As at 25 July 2003 - Reg 987 of 2001 TABLE OF PROVISIONS TABLE OF PROVISIONS 1. Preliminary 2. Approved professional indemnity insurance 3. Other requirements 4. Notification by insurer INSURANCE APPROVAL ORDER 2001 - REG 1 Preliminary 1 Preliminary (1) Definitions In this Order: "Act" means the Health Care Liability Act 2001. "authorised insurer" means a person that has an authority to carry on insurance business under the Commonwealth Insurance Act 1973 and includes a Lloyd’s underwriter. "Director-General" means the Director-General of the NSW Department of Health established under the Health Administration Act 1982. "discretionary professional indemnity cover" means the entitlement conferred by membership of a discretionary mutual organisation to apply for a grant of assistance to meet a liability or potential liability specified by the organisation as one which it may indemnify members against, but which does not provide a contractual right to receive a compensatory payment. "discretionary mutual organisation" means a mutual organisation: (a) which does not directly engage in or carry on insurance or reinsurance business, (b) the membership of which entitles a person, who has a liability or potential liability resulting from a risk or contingency previously specified by the organisation as one which it may indemnify members against, to apply for a grant of assistance to meet such liability or potential liability, but does not provide the person with a contractual right to receive a compensatory payment, and (c) which, after due consideration of an application for assistance from a member who has a liability resulting from a risk or contingency previously specified by the organisation as one which it may indemnify members against, has an absolute discretion whether to indemnify the member. "health care" is as defined in the Act. "health care claim" means a claim for damages or other compensation, whether by verbal or written demand or the commencement of legal proceedings, against a medical practitioner (or his or her practice company) in respect of an injury (including wrongful birth) or death caused wholly or partly by the fault or alleged fault of the practitioner in providing or failing to provide health care. "incident" is an act or omission. "insurance business" has the same meaning as that term under the Insurance Act 1973 (Commonwealth). "insurance regulation order" means an order made pursuant to section 21 or 22 of the Act. "insurer" means an authorised insurer or a discretionary mutual organisation. "medical practitioner" includes a medical practitioner’s practice company. "non-exempt medical practitioner" means a medical practitioner who is not exempt under the Act or regulations from the requirement to be covered by approved professional indemnity insurance in respect of all their medical practice. "mutual organisation" means a not-for-profit organisation formed by a group of persons or companies exposed to some risk or contingency common to the group who are prepared to share financially with each other, on a proportionate basis, the cost of any loss incurred by an individual member of the group, if the contingency occurs to the member. "notified insurer" means an insurer that has notified the Director- General of the Department of Health in accordance with clause 4 of this Order. "policyholder" includes a member of a discretionary mutual organisation. "practice company" is as defined in the Act. "prescribed minimum level" means $10 million per claim and in the aggregate for professional indemnity insurance provided under an insurance contract which is not supplemented by discretionary professional indemnity cover above that limit, and $5 million per claim and in the aggregate for professional indemnity insurance provided under an insurance contract which is supplemented by discretionary professional indemnity cover above that limit. "professional indemnity insurance" is as defined in the Act. (2) However nothing in this order is to be taken to alter the discretionary nature of indemnity offered by a discretionary mutual organisation. INSURANCE APPROVAL ORDER 2001 - REG 2 Approved professional indemnity insurance 2 Approved professional indemnity insurance (1) Professional indemnity insurance is approved for the purposes of the Act if: (a) it is provided by a notified insurer to a medical practitioner under an individual contract or discretionary arrangement with the medical practitioner, and (b) it falls within one of the categories specified at sub- clause (2). (2) The following categories are specified for the purposes of sub- clause (1) (b): (a) professional indemnity insurance, which complies with clause 3, provided by an authorised insurer on a “claims made” basis to at least the prescribed minimum level, under an insurance contract with the relevant medical practitioner, for health care claims, or incidents that may give rise to health care claims (in respect of any occurrence on or after 1 January 2002 or such earlier date as may be specified in the contract), notified to the insurer during the term of the relevant insurance contract. However the insurance is not required to cover health care claims or incidents that may give rise to health care claims: (i) if the practitioner was aware of the claim prior to entering into an insurance contract with the insurer, or was, or should reasonably have been, aware that the relevant incident may give rise to a health care claim and failed to notify the insurer of the incident prior to entering into the insurance contract, or (ii) if the claim, or incident that may give rise to a claim, has been notified in writing under a prior professional indemnity insurance contract or professional indemnity discretionary arrangement, or the practitioner is otherwise entitled to make a claim for, or apply for, indemnity under a prior employment arrangement or other prior contractual or discretionary arrangement., or (iii) that relate to events or conduct specifically excluded by the insurance contract, (b) discretionary professional indemnity cover, which complies with clause 3, provided to a medical practitioner under an arrangement with a discretionary mutual organisation, on a “claims made” basis, for health care claims, or incidents that may give rise to health care claims (in respect of any occurrence on or after 1 January 2002 or such earlier date as may be specified under the terms of the arrangement), notified to the organisation during the period of the indemnity arrangement. However the discretionary indemnity cover is not required to apply to health care claims or incidents that may give rise to health care claims: (i) if the practitioner was aware of the claim prior to entering into a discretionary arrangement with the organisation, or was, or should reasonably have been, aware that the relevant incident may give rise to a health care claim and failed to notify the organisation of the incident prior to entering into the discretionary arrangement, or (ii) if the claim, or incident that may give rise to a claim, has been notified in writing under a prior professional indemnity insurance contract or professional indemnity discretionary arrangement, or the practitioner is otherwise entitled to make a claim for, or apply for, indemnity under a prior contractual or discretionary arrangement, or (iii) that relate to events or conduct specifically excluded from coverage by the arrangement, (c) professional indemnity insurance, which complies with clause 3, provided by an authorised insurer, on an occurrence basis, to at least the prescribed minimum level under an insurance contract with the relevant medical practitioner for health care claims arising from incidents occurring during the period of the insurance contract, other than claims relating to events or conduct specifically excluded by the insurance contract, (d) discretionary professional indemnity cover, which complies with clause 3, provided to a medical practitioner under an arrangement with a discretionary mutual organisation, on an occurrence basis, for health care claims arising from incidents occurring during the period of the membership arrangement, other than claims relating to events or conduct specifically excluded from coverage by the arrangement, (e) professional indemnity insurance provided to a medical practitioner comprising indemnity insurance to at least a prescribed minimum level under a claims made insurance contract of a kind referred to in paragraph (a), supplemented by discretionary indemnity cover above that level under a claims made discretionary arrangement of a kind referred to in paragraph (b), in respect of that proportion of health care claims exceeding the level specified under the insurance contract, or (f) from 1 January 2002 to 31 March 2003, professional indemnity insurance of a kind that was being provided directly to medical practitioners practising in NSW under individual contracts or discretionary arrangements with such medical practitioners immediately prior to 1 January 2002. (3) Professional indemnity insurance is approved for the purposes of the Act if it is of a kind and extent specified at sub-clause (1) which provides cover on an occurrence basis, notwithstanding that the insurer subsequently ceases to provide approved professional indemnity insurance. (4) Professional indemnity insurance is approved for the purposes of the Act if: (a) it provides cover, on an occurrence basis, under a contract or arrangement entered into prior to the commencement of Part 3 of the Act, and (b) upon the commencement of Part 3 of the Act, the relevant insurer provides approved professional indemnity insurance of a kind and extent specified at sub-clause (1). (5) Professional indemnity insurance is approved for the purposes of the Act if it is run-off cover provided consequent upon the termination or expiry of approved professional indemnity insurance of a kind and extent specified at sub-clause (1). (6) Nothing in this clause is to be taken to affect the requirement that an insurer comply with any insurance regulation order in effect. INSURANCE APPROVAL ORDER 2001 - REG 3 Other requirements 3 Other requirements (1) The terms and conditions of the professional indemnity insurance must not exclude from its coverage professional practice on the basis that it is conducted in a public hospital or a licensed private hospital. (2) The terms and conditions of the professional indemnity insurance must not exclude from its coverage professional practice on the basis that it involves patients who do not have private health insurance. (3) The terms and conditions of the professional indemnity insurance must not exclude from its coverage professional practice on the basis of whether patients are, or will be, liable to pay for medical services provided in the course of practice. (4) However these requirements do not prevent the terms and conditions of the professional indemnity insurance from excluding from its coverage professional practice whilst exempt from the requirement to be covered by approved professional indemnity insurance in accordance with the Act or regulations. (5) The terms and conditions of approved professional indemnity insurance must not impose a deductible of more than $50,000 in respect of any health care claim indemnified under the insurance. (6) (a) The terms and conditions of the professional indemnity insurance which is “claims made” cover must confer upon the relevant medical practitioner an option to acquire run- off cover for a further period of not less than seven years, where the insurance contract or membership arrangement is terminated, or expires and is not renewed, for any reason other than fraudulent conduct on the part of the policy-holder. (b) Nothing in this sub-clause limits or otherwise affects the ability of an insurer, either generally or in any particular case, to confer upon a medical practitioner, for no additional premium, run-off cover upon the retirement, or ceasing of practice, of the medical practitioner, or in other circumstances specified by the insurer. INSURANCE APPROVAL ORDER 2001 - REG 4 Notification by insurer 4 Notification by insurer An insurer must satisfy the following notification requirements to be, or continue to be, a notified insurer for the purposes of this Order: (a) the insurer notifies the Director-General in writing by the dates specified in this clause as follows: (i) that the insurer will be providing professional indemnity insurance directly to medical practitioners practising in NSW under individual contracts or discretionary arrangements with those medical practitioners during the period specified in the notification, and (ii) the category or categories of professional indemnity insurance under clause 2 (2) which the insurer will be providing, and (iii) that the insurer understands it is required to comply with any insurance regulation order in effect while providing such professional indemnity insurance. (b) such notification is initially made by the following date: (i) in the case of an insurer that was providing professional indemnity insurance directly to medical practitioners practising in NSW immediately prior to 1 January 2002 and that will be providing professional indemnity insurance to non-exempt medical practitioners from 1 January 2002, that date, unless another date has been approved by the Director-General in any particular case, or (ii) in any other case, by no later than 28 days prior to the date that an insurer proposes to commence offering approved professional indemnity insurance to medical practitioners practising in NSW, unless another date has been approved by the Director-General in any particular case, (c) Following the initial notification, such notification is made by either 1 July in each year or 1 January in each year in respect of the ensuing 12 month period. The insurer is to elect one of these two annual notification dates at the time of initial notification. INSURANCE APPROVAL ORDER 2001 - REG Signed at Sydney this 4th day of December 2001. INSURANCE APPROVAL ORDER 2001 - REG Minister for Health INSURANCE APPROVAL ORDER 2001 - NOTES Note: The Order was repealed by Gazette No 116 of 25.7.2003, p 7500, with effect from 25.7.2003. INSURANCE APPROVAL ORDER 2001 - NOTES Pursuant to section 20 of the Health Care Liability Act 2001, I, Craig John Knowles MP, Minister for Health, do make the following order with effect on and from 1 January 2002: INSURANCE APPROVAL ORDER 2001 - NOTES Historical notes The following abbreviations are used in the Historical notes: ______________________________________________________________ |______________________________________________________________| |______________________________________________________________| |______________________________________________________________| |______________________________________________________________| |______________________________________________________________| |______________________________________________________________| |______________________________________________________________| Table of amending instrumentsInsurance Approval Order 2001 published in Gazette No 190 of 14.12.2001, p 10044.