Australian Government, Australian Government Actuary

Appendix 2: Run-Off Cover Scheme Claims

A.2.1 The legislation defines claims broadly. Claims need not involve legal proceedings. Claims may include civil claims for negligence, administrative proceedings, disciplinary proceedings (including those performed by a professional body) and inquiries or investigations into conduct (subsection 4(1) of the Medical Indemnity Act).

A.2.2 A ROC claim is payable to an MII or MDO under section 34ZC in relation to a claim eligible under subsection 34ZB(1) if:

  • it was first notified to the MII or MDO on or after 1 July 2004;
  • it relates to a person eligible under subsection 34ZB(2) (see Appendix 1);
  • it relates to incident(s) occurring in connection with the person’s practice as a medical practitioner (see paragraph 34ZB(1)(b));
  • either the person is indemnified for the claim by an MII in accordance with section 26A of the PSPS Act, or the person is indemnified under incident-occurring based cover provided by an MDO (paragraph 34ZB(1)(e)); and
  • the claim would be paid in the ordinary course of the MII’s or MDO’s business.

A.2.3 Where these criteria are met, the Commonwealth is liable to pay run-off cover indemnities regardless of whether the MII or MDO has sought private reinsurance (section 34ZF).

A.2.4 Applications for ROC indemnity payments must be made to DHS (section 36 of the Medical Indemnity Act). They are paid by the Chief Executive Medicare before the end of the month that immediately follows the month in which the MII applies for the indemnity (section 37).

A.2.5 The Scheme operates after the HCCS. Thus, part of the cost of eligible large claims is first met by the HCCS with the rest being picked up by the Scheme (subsection 34ZH(2)). Where the total incurred cost of an eligible ROC claim exceeds the HCCS threshold (currently $500,000), the HCCS meets 50 per cent of the amount by which it exceeds the threshold.10


10 As announced by the Government on 19 December 2017 in the Mid-Year Economic and Fiscal Outlook 2016-17, the High Cost Claim Threshold has increased from $300,000 to $500,000 from 1 July 2018.