Summary
The regulations impose prudential supervision and product standards on medical indemnity insurers, including capital adequacy, risk management, and coverage requirements, to protect policyholders and ensure financial stability.
Reason
Keeping this instrument adds billions in compliance costs that are passed to doctors as higher premiums, making healthcare less affordable. It creates barriers to entry that reduce competition, concentrate market power, and stifle innovation. The unseen costs include reduced availability of medical services in rural and remote areas, where insurers face higher compliance burdens relative to market size. These distortions could be avoided by relying on private credit ratings, mandatory financial guarantees, and market discipline, which achieve solvency without heavy-handed regulation.