In Australia, it is a mandatory requirement for registered healthcare practitioners to hold appropriate medical indemnity insurance coverage for healthcare practices in Australia. Medical indemnity is a form of professional indemnity coverage defined by Australian legislation – the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003 and is a type of general insurance (see Insurance in Australia). In the United Kingdom, this type of professional indemnity for healthcare practitioners is generally referred to as ‘professional indemnity’ and in the United States, medical negligence insurance. In Australia, the term medical indemnity can be used to refer to all healthcare indemnity (e.g. dental, allied health, medical), not just that provided for medical doctors. However, there are only six Australian Health Practitioner Regulation Authority (AHPRA) listed insurers that provide medical indemnity insurance cover to medical practitioners.^[1] Australian medical practitioner medical indemnity providers include:

• Avant
• Berkshire Hathaway Specialty Insurance Company (distributed by Tego Insurance)]
• Guild Insurance Limited (oral and maxillofacial surgeons only)
• MDA National Limited (MDAN)
• Medical Indemnity Protection Society (MIPS)
• Medical Insurance Australia Group (MIGA)

Industry bodies include the Insurance Council of Australia and the Medical Indemnity Industry Association of Australia.

Australian medical students are provided with a limited free membership to any medical indemnity provider. On commencement as a doctor and during vocational training, a heavily discounted membership provides wide access to work-related legal support through the indemnity provider. Once a training doctor has completed medical speciality training, the annual premium increases, and based on the individuals income from their medical practice. Doctors who practice wholly in public hospitals or non-clinical academics are provided with indemnity from their employer. However, it is advisable to hold a policy with a medical indemnity provider for that extra layer of protection and access to support when needed. For example, a public hospital doctor who may have conflict with their employer, will be able to seek legal support from their indemnity provider.

Following the UK model from the late nineteenth century, Australian doctors have protected themselves through establishing state-based mutual organizations collectively called Medical Defense Organizations (MDOs). These medical defense organizations traditionally provided discretionary coverage, rather than coverage under a contract of insurance.
On 31 May 2002, the Australian Government announced a strategy to improve transparency in the medical indemnity industry, make medical indemnity a viable commercial product and bring medical defense organizations (MDOs) away from discretionary coverage and into the fold of all insurance under the prudential framework. This strategy was brought about because of the medical indemnity crisis of 2002.^[2]

In April 2002, Australia's largest medical indemnity insurer, United Medical Protection (UMP), entered voluntary administration with unfunded group liabilities of $455 million.^[3] The Australian Government responded by providing an initial capital guarantee of $35 million until 30 June 2002, but by November 2003 this had become a comprehensive support package.^[4]

The Medical Indemnity reforms created several changes for medical indemnity in Australia. Importantly all medical indemnity coverage now had to be provided as insurance; only by Australian authorized insurers; and the cover offered changed from claims-incurred to claims-made insurance. This provided a better way for insurers to estimate liabilities, hence, stabilize the industry.

Medical Indemnity in Australia stabilized following the introduction of the Federal Government initiatives Tort reforms and better than predicted run-off of IBNR claims liabilities. In a report from the Australian Government just three years after UMP received a bailout package from the Government, the industry was described as healthy:

“In March 2005, it is clear that the total of all the initiatives introduced by both state and federal governments, the oversight of the regulators, APRA and the Australian Competition & Consumer Commission (ACCC) and, most importantly, by the medical indemnity industry itself, has brought the industry back to a state of health surprisingly quickly. All the insurers have reached — or are well on the way to reaching — the capital APRA requires. Tort law reform seems to have had a significant effect in reining in the previous trends to ever-escalating claims. There is a strong spirit of both cooperation and healthy competition in the industry”.^[15]