Fast forward - 15 May 2012

MO looks back 10 years, casting a fresh eye over what made the news in 2002. Then we hit the fast-forward button to see what’s changed.

A DECADE ago Townsville GP Dr Jim Sheppard was the first Australian doctor to feel the brunt of United Medical Protection’s slow-motion collapse when he was forced to settle a claim out of his own pocket.

Ten years on and Dr Sheppard can look back and laugh at the experience, but he told MO at the time he was left to fend for himself when UMP informed him they would not be covering his expenses.

“I have had no opportunity to clear my name… Without insurance cover, there was no way I could take a gamble and go to court,” he said at the time.

By the time a provisional liquidator was appointed to UMP in 2002, the company had debts of about $50 million and another $415 million in unfunded incurred but not reported claims, according to the Australian Parliamentary Library.

With more than 60% of Australian doctors on its books, UMP’s troubles prompted thousands of GPs to look for alternative insurance options, transfer assets to family trusts or incorporate their practices to protect themselves in the event of a claim.

MDA National president Associate Professor Julian Rait said it was only the “good grace of the Howard government”, which agreed to cover UMP’s outstanding liabilities, that prevented a full-scale catastrophe.

“With hindsight, it was all avoidable,” he said.

“We had moved to a claims made model, as opposed to the claims incurred model UMP was using, five years previously and we were able to avoid a catastrophe when it all happened in 2002.”

Professor Rait said although the indemnity crisis had sparked widespread panic at the time, it led to a series of reforms that revitalised the industry.

“Tort law reform was introduced, UMP was bailed out and the run-off cover, premium support and high cost claims schemes were introduced,” he said.

“The government, very wisely, insisted the MDOs become regulated insurance companies. The industry has transformed since then. It is now so much better supervised and managed than it was.”