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.
[4] 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.
Most MDOs did not fully fund the projected incurred but not yet reported (IBNR) claims liabilities that are consequent upon providing occurrence-based coverage.
As a consequence of changes in accounting standards, some indemnity providers were found to be at risk of not being able to meet future liabilities.
[8] MDOs responded by calling on their members for additional funds, and/or moving to offer claims-made coverage to help correct historic underfunding of incurred but not reported liabilities (IBNRs).
[11] The Australian Prudential Regulation Authority (APRA) ordered that all medical indemnity providers meet the minimum capital requirement.
Then-president of the Australian Medical Association, Kerryn Phelps, said "If UMP falls over today, 90 percent of NSW doctors couldn't go to work tomorrow.
The justification for the bail-out package was that UMP was too important rather than too large – notably, the Australian Government did not bail out HIH which collapsed at a similar time but was a much larger enterprise.
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.