Insurance Contracts Act medical indemnity regime

After protracted review, the Insurance Contracts Amendment Bill 2013 (Cth) (Bill) has moved through the House of Representatives into the Senate.

The initial review of the Insurance Contracts Act 1984 (ICA) was initiated by the Howard Government in 2003, however it is only now, in 2013, that at least some of the review panel’s recommendations may actually be legislated.

The Bill essentially re-introduces measures contained in the Insurance Contracts Amendment Bill 2010 (Cth), with a few minor refinements. The main areas addressed are:

  • Duty of utmost good faith: Section 13 of the ICA will be amended so that a breach of the duty of utmost good faith will be both a breach of contract and of the ICA. The duty is extended to apply to third party beneficiaries, after a policy is entered into.
  • ASIC powers: ASIC will have a statutory right to intervene in proceedings relating to matters arising under the ICA and Part 3 of the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003 (Cth) which deals with product standards for medical indemnity insurance contracts. ASIC will also be able to pursue insurers by way of representative action on behalf of third party beneficiaries, for breaches of the duty of utmost good faith.
  • Disclosure: The Bill clarifies misrepresentation and what might constitute compliance with the duty of disclosure under the Act.
  • Remedies: The Bill prescribes additional and more flexible remedies for life insurance contracts under section 29.
  • Subrogation: The Bill proposes to clarify distribution of proceeds of subrogation claims, including by extending provisions to apply to third party beneficiaries.
  • Third party beneficiaries: The Bill clarifies rights and obligations of those covered by, but who are not party to, a contract. It extends to third party beneficiaries the duty of utmost good faith, rights to give notices under section 41, and rights under section 51 to claim against an insurer where their insured cannot be located.
  • Electronic communications: Service of documents and statutory notices required by the Act may be carried out electronically. Currently, the ICA is exempt from the operation of the Electronic Transactions Act 1999.

The amendments will commence in stages over a period of 30 months from the date the legislation comes into effect..

National disability insurance scheme

The National Disability Insurance Scheme Act 2013 (Act) came into effect on 28 March 2013. It will introduce the National Disability Insurance Scheme (NDIS) and establish the NDIS Launch Transition Agency (Agency) that will administer it.

The NDIS, to be known as ‘DisabilityCare Australia’, will be implemented over four years. The Scheme is intended to allocate resources so that people with disabilities and their carers will be sufficiently supported on a long-term basis. It is designed to give effect to Australia’s obligations under the Convention on the Rights of Persons with Disabilities.

Funding model

Funding in this area has historically been based on budget allocations. The NDIS model is still publicly funded, but is centred instead on insurance-based principles and individual assessment of need and future costs. The Scheme not only incorporates funding, but also research, data collection and maintenance.

The NDIS

The NDIS marks a move away from a ‘crisis model’, where families only receive support if they cannot continue caring and there are no other options. The Scheme will set out ‘disability requirements’ for eligibility, including intellectual, physical and psychiatric disabilities. These must be permanent, or likely to be permanent, and severe.

The Agency will work with eligible participants to allocate them a budget based on an individual plan, taking into account personal circumstances and service needs as are ‘reasonably and necessary’ over the course of each participant’s lifetime.

Currently, support is based largely on location and the manner in which a person becomes disabled. A notable feature of the NDIS is that a seriously disabled person will obtain care and support if they satisfy the requirements, regardless of location or cause of disability.

Governance

The NDIS will be administered primarily by the Agency. A ministerial council will also be formed, ensuring accountability to the Federal Government. Each state and territory government, as well as the Federal Government, will be represented on the council.

The Act will be accompanied and supplemented by the NDIS Rules, which will set out how criteria are to be applied and assessed, which services are provided, as well as how, and what is ‘reasonable and necessary’ in providing support.

Please see http://www.ndis.gov.au/  for further information.

Aged care reform package

Living Longer Living Better (LLLB) is a Federal Government reform initiative designed to reshape aged care in Australia. $3.7 billion will be provided over five years, and the reforms will be progressively implemented over 10 years. LLLB is a product of the Productivity Commission report ‘Caring for Older Australians’, which identified the need for substantial change.

The focus of LLLB is on providing better access to residential care, providing more support and care in the home and for those with dementia, and strengthening the aged care workforce. The most significant funding allocations are $1.9 billion to deliver better access to aged care services, and $1.2 billion to address aged care workforce shortages through a Workplace Compact to attract, train, and retain workers.

Legislative changes will be made to the Aged Care Act 1997 and related legislation. Broadly, they are changes to: residential care, home care, and governance and administration. Notably, the distinction between approvals for recipients of high and low level residential care will be removed from the current Act, and

replaced by one type of approval for permanent residential care. Amendments will also be made to payment and contribution rules, through changes to subsidy calculation and payment options for care recipients.

Other changes include:

  • additional home care places;
  • introduction of a new Commonwealth home support program;
  • integration of information and assessment processes through a new website and national call centre;
  • more aged care facilities for indigenous Australians;
  • amended rules for payments and contributions, including more choices of payment methods and the introduction of a lifetime care cap of $60,000; and
  • fairer means testing for payments and residential and home care packages, based on the capacity to pay.

The reforms will also establish a number of new non-statutory bodies, including an Aged Care Reform Implementation Council and Aged Care Financing Authority, as well as a proposed Aged Care Pricing Commissioner.

Please see http://www.livinglongerlivingbetter.gov.au/  for further information.