3.1.1. For the purpose of preparing this report, certain data was collected from MIGA by Department of Human Services (DHS) during late 2018 including:
- details of midwives who were identified as having become eligible to claim under the ROC Scheme under subsection 31(2) of the Act before 30 June 2018;
- details of claims (including incidents) notified to MIGA by 30 June 2018 which might eventually become eligible for reimbursement under the ROC Scheme;
- details of ROC support payments;6
- actuarial estimates of that part of the future claims cost of incidents projected to be notified during the 2018-19 to 2022-23 financial years which is expected to be reimbursed under the ROC Scheme; and
- actuarial estimates of that part of the future claims cost of incidents occurring during 2018-19 which is expected to be reimbursed under the ROC Scheme.
3.1.2. Department of Health provided the actual numbers of midwives who were eligible for Commonwealth supported professional indemnity cover for the years from 2010-11 to 2017-18.
3.2.1. The results in this report rely on information provided by MIGA and MIGA’s actuaries as well as ROC support payment data and midwife eligibility data provided by DHS. Guidance was provided as to the nature of the data, calculations and information required. This information is regarded as the most suitable information available for the current purpose.
3.3.1. Midwives eligible for Government-supported midwife professional indemnity cover become eligible for the ROC Scheme by means of permanent retirement at age 65 years or older, cessation of private practice for three years, death, permanent disability or maternity leave.
3.3.2. Appendix 2 describes the test of eligibility for the ROC Scheme and the process of issuing and notifying compulsory run-off cover to eligible midwives. Eligible midwives are entitled to receive notification of the terms and conditions of compulsory run-off cover from MIGA. MIGA is also required to notify DHS of the details of the compulsory run-off cover provided.
3.3.3. There are inherent lags involved in notification of the details of eligible persons to DHS. For example, there will often be a delay between the time that a midwife becomes eligible for the ROC Scheme and the time when the insurer becomes aware of this. As a result, it is only possible to estimate the number of midwives who have become eligible for the ROC Scheme at any time. For this reason, the numbers of eligible midwives reported by MIGA need to be treated with caution.
3.3.4. According to the eligibility data provided by DHS, there were 9 ROCS eligible midwives as at the valuation date. Almost all have become eligible in 2017-18. One midwife has ceased eligibility. Table 1 illustrates the breakup of new entrants by reason of eligibility, based on the data provided by MIGA.
Table 1: Run-Off Cover Scheme new entrants by reason of eligibility
3.4.1. Appendix 3 describes claims which meet the criteria for reimbursement from the Australian Government through Run-Off Cover Commonwealth contributions. Broadly, the insurer (that is, MIGA) is entitled to reimbursement from the Australian Government for the costs of claims which:
- are first notified to MIGA on or after 1 July 2010;
- relate to an incident which occurs or occurred on or after 1 July 2010;
- relate to a midwife who is eligible under the ROC Scheme at the date of notification;7 and
- meet the other requirements for ‘payable claims’.8
3.4.2. As at 30 June 2018, MIGA has not identified any claim as potentially being eligible for the Scheme.
3.5.1. ROC Commonwealth contributions are the payments made by the Australian Government to MIGA as reimbursement of the costs of eligible claims.
3.5.2. If a claim is eligible for Level 1 or Level 2 Commonwealth contributions, then the amount of the ROC Commonwealth contribution is reduced by the amount of the Level 1 or Level 2 Commonwealth contribution.
3.5.3. No ROC Commonwealth contributions were made during 2017-18. As this is the first year that any eligible midwives have been identified, no ROC Commonwealth contributions have been made since the inception of the Scheme.
3.5.4. The Commonwealth’s own administration costs are funded separately and so are not considered in this report.
3.6.1. ROC support payments are paid to DHS in the form of an annual lump sum imposed as a tax on MIGA from 1 July 2010 under the ROCSPA.
3.6.2. The amount of ROC support payments is calculated using a method set out in the ROCSPA. Appendix 1 describes the calculation in detail. Very briefly, it is based on:
Applicable rate × (premium income less taxes and charges) ÷ (1 + applicable rate).
3.6.3. In 2017-18, the applicable rate was 10 per cent.
3.6.4. In total, $43,177 ROC support payments were received during the 2017-18 financial year.
3.6.5. In order to provide full transparency for midwives, MIGA is required to attribute ROC support payments to individual policyholders. Each premium notice specifies the amount that has been included in the policyholder’s invoice to meet MIGA’s ROC support payment obligations. All amounts are reported to DHS, which maintains a record of each midwife’s total run-off cover credit. Interest is applied to this balance annually at the short term bond rate in accordance with section 44 of the Act.
3.6.6. Division 4 of the Act provides for certain payments, should the Scheme ever be wound up without alternative arrangements being put in place. Thus, midwives who were still practising at the time of the wind up of the ROC Scheme would be entitled to have an amount not exceeding their total run-off cover credit paid to their nominated professional indemnity provider. Midwives who were eligible for the ROC Scheme at the time of its wind up would not be entitled to any refund but would continue to be covered for any future claims that might emerge.
6 A database of ROC support payments is maintained by DHS.