Offence—compulsory offer

(1)

A person (the insurer ) commits an offence if:

(a) the insurer provides medical indemnity cover for a health care professional under a regulated insurance contract; and
(b) an event prescribed by the regulations for the purposes of this paragraph occurs during the claims period for the regulated insurance contract; and
(c) the insurer does not make an offer (the compulsory offer ) to the client that satisfies all of the following subparagraphs:
(i) the offer is an offer to provide medical indemnity cover for the health care professional in relation to compensation claims that are made against the health care professional in relation to the health care professional's otherwise uncovered prior incidents and the offer satisfies the requirements specified in the regulations for the purposes of this subparagraph;
(ii) the offer is made within 28 days after the insurer becomes aware of that event;
(iii) the offer is a complying offer.

Note: For complying offer , see section 24.

Penalty: Imprisonment for 12 months.

(2)

Without limiting subparagraph (1)(c)(i), the regulations made for the purposes of that subparagraph may specify requirements in relation to:

(a) the compensation claims to be covered by the contract being offered; and
(b) the limits on the amounts payable by the insurer under the contract being offered (whether in relation to an individual compensation claim or in relation to compensation claims made during a particular period).

Without limiting paragraph (a), the regulations may specify the compensation claims by reference to the period during which the compensation claims can be made.

Offence—entering into new contract before response to compulsory offer received

(2A)

For the purposes of making an offer to provide the cover referred to in subparagraph (1)(c)(i) for a health care professional, disregard the regulated insurance contract referred to in paragraph (1)(a) in determining the health care professional's otherwise uncovered prior incidents.

(2B)

In determining whether an offer made by an insurer to provide medical indemnity cover for a health care professional satisfies subparagraph (1)(c)(i), disregard:

(a) an otherwise uncovered prior incident of the health care professional; or
(b) a compensation claim in relation to an incident of that kind;

if it is reasonable and appropriate for the insurer to exclude the incident or claim from the cover being offered, having regard to:

(c) the nature of the health care provided by the health care professional during the period during which the otherwise uncovered prior incident occurred; and
(d) the kinds of exclusions that are usually provided for in contracts of insurance that provide similar cover to the cover being offered; and
(e) any other relevant consideration.

(3)

A person (the insurer ) commits an offence if:

(a) the person provides medical indemnity cover for a health care professional under a regulated insurance contract; and
(b) paragraph (1)(b) applies to the regulated insurance contract; and
(c) after the insurer makes the compulsory offer, the insurer subsequently enters into a contract of insurance with the client to provide medical indemnity cover for the health care professional in relation to an otherwise uncovered prior incident of the health care professional; and
(d) the contract referred to in paragraph (c) is not entered into in response to the compulsory offer; and
(e) the contract referred to in paragraph (c) is entered into before the client has given the insurer a written response to the compulsory offer.

Penalty: Imprisonment for 12 months.

Offence—record keeping

(4)

A person (the insurer ) commits an offence if:

(a) the insurer provides medical indemnity cover for a health care professional under a regulated insurance contract; and
(b) paragraph (1)(b) applies to the regulated insurance contract; and
(c) the insurer does not keep the following:
(i) a copy of the compulsory offer;
(ii) either a copy of the client's written response to the compulsory offer or a written record (made within 14 days after the end of the compulsory offer period) of the client's response, or failure to respond, to the compulsory offer;
(iii) a copy of any other offer that the insurer makes to the client, while the compulsory offer is open for acceptance by the client, to provide medical indemnity cover for the health care professional in relation to an otherwise uncovered prior incident of the health care professional;
(iv) a copy of any invitations that the insurer makes to the client, while the compulsory offer is open for acceptance by the client, to make an offer to enter into a contract of insurance under which the insurer would provide medical indemnity cover for the health care professional in relation to an otherwise uncovered prior incident of the health care professional;
for the period of 5 years starting on the day on which the compulsory offer is made.

Penalty: Imprisonment for 6 months.

No offences if regulations not in force

(4A)

The insurer commits an offence against subsection (1), (3) or (4) only if regulations are in force for the purposes of subparagraph (1)(c)(i) both:

(a) when the event referred to in paragraph (1)(b) occurs; and
(b) when the period of 28 days referred to in subparagraph (1)(c)(ii) ends.

If this is so, the requirements that the compulsory offer must satisfy are those specified in the regulations as in force when the event referred to in paragraph (1)(b) occurs.

Defences for offences against subsections (1), (3) and (4)

(5)

Subsections (1), (3) and (4) do not apply if every health care incident covered by the regulated insurance contract is, or would be, one occurring outside Australia and the external Territories.

Note: A defendant bears an evidential burden in relation to the matter in this subsection (see subsection 13.3(3) of the Criminal Code) .

(6)

Subsection (1) does not apply if:

(a) the insurer makes an offer for the purposes of subsection (1); and
(b) the only reason why the offer does not satisfy subparagraph (1)(c)(i) is that the offer does not extend to some of the health care professional's otherwise uncovered prior incidents; and
(c) the insurer has reasonable grounds for believing that the offer does extend to all the health care professional's otherwise uncovered prior incidents.

Note: A defendant bears an evidential burden in relation to the matter in this subsection (see subsection 13.3(3) of the Criminal Code) .

Compulsory offer has no effect in certain circumstances

(7)

A compulsory offer made by an insurer for the purposes of subsection (1) ceases to have effect if the winding up of the insurer starts before the offer is accepted.

Note: An insurer must not carry on insurance business after the winding up of the insurer has started: see section 116 of the Insurance Act 1973 .

Effect of subsection (1)

(8)

Subsection (1) has effect subject to section 116 of the Insurance Act 1973 .

Note: This means that an insurer does not have to make a compulsory offer for the purposes of subsection (1) once the winding up of the insurer has started.