for guidance. Why The new place protect members, insureds and What is a merger? their members.

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1 Questionss and Answerss For members, clients and stakeholders Introduction This document has been preparedd to assist members, clients, insureds and stakeholders of both MDA National and MIGA to understand what the proposed merger (Merger) will mean for them and both businesses. It will be updated as matters progress over time and we encourage you to refer to this document for guidance. General questions Why are MDA National and MIGA merging? The Boards of both organisations have madee a decision to proceed with a proposed Merger by creating a new medical defence organisation (MDO) that builds on the heritage of each MDO. We believe the increased scale and economic efficiencies which are expected to result over time from the Merge will place the new organisation in a stronger market position that enables it i to continue to support and protect members, insureds and clients with enhanced products and services. What is a merger? A merger occurs when two organisations create a new single entity andd the members of both organisations become members of the new entity. This equires the agreement of the organisations and their members. I ve heard that mergers don t really exist, normally it s a takeover from the stronger organisation,, please explain? The Boards are approaching this Merger as a merger of equals, combining the strengths of both organisations. Reflecting this approach, the Chairmen of the new MDO and its insurance company will be a current Chairman from each of MDA National and MIGA. MIGA and a MDA National have been collaborating closely on decisions regardingg the appointment of the CEO and Boards, the name of the new organisationn and a commitment to continue with a national geographic footprint. Thursday, 27 March 2014 Pagee 1 of 9

2 What are the key benefits? The Boards believe the following are the key benefits of the Merger for members and clients: Quality and professional service o o o Bringing together the best qualities of these two organisations, with a tangible commitment to delivering quality and service that is second to none An opportunity to deliver new or enhanced products and services, by combining the knowledge and skills that each organisation has to offer and from building on each other s successes A larger presence in all key states across Australia Financial capability o Increased capacity to offer competitive premiums to an extent which may not otherwise be achievable by either MDA National or MIGA alone, by leveraging off: Expected economies of scale that will be achieved by reduced operating expenses A significantly larger and geographically more diverse member and client base that will improve the new MDO s ability to offer stable premiums for the significant majority of members and the potential to deliver premium benefits over time. What will be the profile of the new organisation? The merged organisation will build on the existing national footprints of each of MDA National and MIGA and will have a combined doctor membership approximately twice that of each MDO currently, while maintaining the strong capital ratio of each insurance company. The new organisation will have a membership and client base that spans the length and breadth of Australia, with doctors working in the public and private sectors, dentists, medical students, corporate health care entities and eligible midwives in private practice. What will be the name of the new organisation? The new MDO will be known as Medical Defence Australia Limited and the insurer will be known as MDA Insurance Pty Ltd. These names have been chosen to recognise the heritage of the two MDOs, Medical Defence Association of South Australia and MDA National (formerly Medical Defence Association of Western Australia) and to recognise a key component of their core purposes. Are either or both organisations experiencing financial difficulty? No. On the contrary, both organisations have a strong capital base in excess of APRA s requirements. The Merger provides an opportunity to strengthen and improve on the existing national footprints of each organisation, to increase their membership and client base nationally and to provide a strong platform to achieve the objective of continued long term national growth. Why MDA National and MIGA? Some of the key drivers to the Merger are the cultural and organisational fit between MDA National and MIGA, the capital strength that will result from a merger of the two, the potential benefits for our members, insureds and clients in terms of a strong capital base, economic efficiencies and the broadening in the diversity of our member and client base. Thursday, 27 March 2014 Page 2 of 9

3 Board and CEO Will you have a Mutual and an Insurance Board? Yes, the new organisation will have both a Mutual and an Insurance Board. Who will Chair the Boards? The Chairman of the MDO Board will be Associate Professor Julian Rait (MDA National) and Dr John O Loughlin (MIGA) will be the Chairman of the Insurance Board. Who will be the Directors? The founding Directors of the new Boards, who will be selected in equal numbers from the current directors of MDA National and MIGA, encompass all of the competencies and experience to lead the new organisation with the skill set and experience required of a national insurance based organisation with a strong focus on member and client benefits. We expect to be able to announce the names of the founding Directors soon. Who will be the CEO of the new organisation? Mandy Anderson, the current Managing Director and CEO of MIGA, will be appointed as CEO and Managing Director. Mandy Anderson has broad experience in general business management, risk management and insurance, particularly professional indemnity insurance including medical malpractice cover. She has extensive knowledge of the Australian and international insurance markets. As the Managing Director of MIGA, Mandy was selected by the Boards of both organisations to take the new organisation forward. Why was that CEO selected? MIGA and MDA National both have strong executive leadership under Mandy Anderson and Peter Forbes respectively. Before the Merger was proposed, Mr Forbes had announced his plans to retire in He has confirmed that this remains his intention. Ms Anderson has led MIGA for 14 years and has a strong background in management, insurance and intimately understands medical indemnity in Australia. As the Managing Director of MIGA, Mandy is well placed to lead the new organisation. Office structure Where will the head office be located? The new organisation will have a national footprint and will continue to provide local support and assistance to members, insureds and clients across Australia. It is expected that in line with modern business practice the staff will work from a number of locations across the country. Will you continue to have local offices in each state? Yes, the operating structure will ensure we continue to provide support to members, insureds and clients through a national footprint across Australia. Where there is a need or a clear benefit from amalgamating, an assessment will be made on which office should remain and communicated accordingly. Thursday, 27 March 2014 Page 3 of 9

4 Other What will be the effective date of the Merger? The date of the Merger, if all member, client, regulatory and court approvals and requirements are met, is expected to be in the fourth quarter of 2014, with a transfer of policyholders to a single insurer at a date to be agreed. Is the Merger definite? The Merger is subject to member, regulatory and Court approval. The Boards of both organisations have agreed to recommend the Merger to the members of their MDOs. Completion will not occur until after the members of each organisation have given their approval. At this stage it is expected that meetings for that purpose will occur in late August or early September Before then, an explanatory statement in the form of a scheme booklet will be sent to all members. We will continue to keep you updated. What is involved in merging the two organisations? The process of meeting regulatory requirements and obtaining member and court approval may take at least 6 to 8 months. The Merger will only proceed if members approve it, if it is verified by independent experts to be in members best interests and if the Federal Court approves the Merger. Regulators such as APRA and the ACCC will also review the Merger. The approval process is a lengthy one and no changes will take effect without full communication to members, clients, insured, staff and stakeholders. At this stage we anticipate the Merger of the MDOs will take effect in the fourth quarter of 2014, with a transfer of policyholders to a single insurer at a date to be agreed. Do members get the opportunity to vote for or against the merger? Members of MDA National and MIGA will separately be asked to vote on the proposed Merger, after having an opportunity to explore and understand the benefits of the Merger. The dates of the respective general meetings will be communicated at a later date. Student members and certain other classes of members do not have member voting rights. What happens if members do not support the Merger? Should the required majority of members of either MDA National or MIGA not provide their approval, the Merger will not proceed. What happens if I don t want the Merger to go ahead? If you are a voting member of either MDA National or MIGA and do not want the Merger to proceed, you will have the opportunity to vote against it in person or by proxy at the general meeting called by your current MDO. If you require further information about the benefits of the Merger contact either MDA National or MIGA to discuss. What assurances will be provided to members that the new organisation will be in a strong financial position? A detailed explanatory statement will be developed setting out the expected benefits and risks in the Merger for members of the respective organisations. This will be provided to members to inform their decision as to whether to support the Merger. As part of the court approval process, evidence is required to substantiate that appropriate financial analysis has been undertaken. The Boards of both organisations are confident the Merger will create greater opportunities to further strengthen the financial security of the new organisation. Thursday, 27 March 2014 Page 4 of 9

5 What happens to members until the effective date of the Merger? Doctors For both MIGA and MDA National, it is business as usual until the effective date of the Merger. Will members be required to vote as part of the merger process? Members of each organisation will have the opportunity to vote separately as a precondition of the Merger. Voting is strongly encouraged but is not compulsory. What changes if any, will occur to this year s renewal? This year s renewal will go ahead as normal with your current MDO. Your membership will remain with your current MDO and your insurance will continue to be provided by your current insurer for the 2014/2015 renewal. What will my renewal date be? Your renewal date will not change for your renewal in The new organisation may consider offering renewal at different dates in the future. Will premiums change either upwards or downwards at renewal or in future? For this year s renewal, it is business as usual for both MDOs. While no insurer can guarantee future premiums, the Merger provides opportunities to benefit from economies of scale and broader and more diverse claims data that will improve the new MDO s ability to offer stable premiums for the significant majority of members and the potential to deliver premium benefits over time. Will members pay a membership fee with the new organisation? It is expected that the structure of the new organisation will be consistent with the current structure of both organisations. A member owned mutual organisation will continue to be the head company in the group. Members will continue to pay a membership fee for the membership services provided above and beyond the insurance cover and insured members will pay a premium to the insurance company owned by the new MDO. Will members continue to receive the same insurance cover and member benefits? At your forthcoming renewal, your existing insurer will offer insurance and member benefits as it usually does. After completion of the Merger, the new organisation will review the member benefits and insurance cover from both organisations with an expectation it will go forward with the best of both. Will the Merger change the current insurance arrangements for members with either MDA National or MIGA? Your current insurance and renewal arrangements will not be affected. If the Merger is successfully completed then, at the next renewal date, insurance cover will be provided by the insurance company owned by the new MDO. Will the benefits offered now for being continuously insured by, or for holding continuous membership of, MIGA or MDA National be preserved by the new MDO? The preservation of long term membership benefits for existing members and of continuous cover benefits for existing insureds will be explained in the explanatory statement sent to all members. Thursday, 27 March 2014 Page 5 of 9

6 If either MDA National or MIGA has committed to sponsor or attend an event that a member is involved in, what will happen now? The new organisation will meet all formal commitments made by either organisations pre merger in relation to sponsorships and events. Will members need to complete a new Application Form as a result of the Merger? New applications will not be required by members of either MIGA or MDA National. Details of membership and insurance rollover will be provided prior to renewal. For doctors wishing to join the new organisation, details of how and when to complete an application form will be made available at a later date. Will members retroactive (tail) cover be protected? Your retroactive (tail) cover will remain in place with policies issued by the new organisation. Medical Indemnity legislation requires that an offer of cover for any uncovered prior period of medical practice must be made when an offer of insurance is made. This will not be impacted by the Merger. Can members continue to pay monthly premiums? Will members special arrangements be honoured? Will the new insurer cover me and on what terms? For this year s renewal and until the Merger takes effect, MDA National and MIGA will continue to provide the same high quality services and benefits that members have come to expect. As part of the Merger process, members and policyholders will receive information explaining whether and how their membership and insurance will be transferred to the new MDO. What happens with any claims or incidents previously notified to either MDA National or MIGA? All claims or incidents notified to MDA National or MIGA in the past will continue to be managed for you with the same level of professionalism and support that you have been provided in the past. If your claim has not been finalised prior to the completion of the Merger, your claim will continue to be managed by staff of the new organisation. Who in the new organisation will be managing existing claims? Claims and support staff from both organisations will move into the new organisation, and the same standard of professionalism and support will be provided to members and clients in the management of claims. If I have a question about an existing claim, who should I call? For all queries about an existing claim please continue to call your current insurer. If the Merger is finalised you will be advised about any new contact arrangements. I am a current MDA National or MIGA member or client and was considering moving to the other organisation at renewal. Should I just stay where I am? Until the Merger occurs, both businesses will be operating their businesses as usual and remain competitors. We encourage you to review your own personal circumstances and make a decision to renew with your current MDO or transfer to another, based on an assessment on what will best suit your individual needs. Thursday, 27 March 2014 Page 6 of 9

7 Dentists - How will the merger impact on the members of ADAWA/DPL? Dental insureds policies will be part of the renewal process in 2014 as usual and we will contact them through ADAWA and DPLA about the impact of the Merger as it progresses. - Who should dentists speak with if they have any questions? Dentists should speak directly with their scheme providers either DPLA or ADAWA. - How will the merger impact on the renewal process this year? There will be no changes to the renewal process this year. - Will ADAWA/DPL still be the main contact? The current contacts that you currently have for ADAWA and DPL remain. - Will current premiums be affected as a result of the merger? No. Midwives - How will this impact me as a midwife? The Merger will not impact your insurance arrangements with MIGA under the Midwives Insurance Scheme. Your renewal in June 2014 will occur as usual and next year will be offered by the new MDO s insurer. - Who should a midwife speak with if they have any queries? Should you have any questions regarding the Midwives Insurance Scheme please call Ros or Lynda at MIGA on What impact will the Merger have on renewals this year? This year s renewal will go ahead as normal and your insurance will continue to be provided by MIGA. Students - How will the Merger impact students? The Merger will provide you with the opportunity to be supported and insured by the combined expertise and strength of both organisations. Your membership and cover will continue through to renewal with your existing MDO and you will receive information about how your insurance cover will continue after the Merger. - Will the Merger have any impact on current student insurance policies? The merger will not impact your current insurance policy. Your cover will continue to be provided by your current insurer until any insurance transfer is finalised. - Some students are currently insured by both MDA National and MIGA what do they need to do? Your current insurance will continue with both organisations until any insurance transfer is finalised. At your next renewal if the merger is finalised, insurance cover will be offered to students by the new MDO s insurer. Thursday, 27 March 2014 Page 7 of 9

8 - Who should students contact if they have any questions? If you have any queries please call MIGA or MDA National as you have in the past. - How will the Merger impact on the insurance renewals in 2014? Your current insurance will continue with one or both of the organisations until the Merger is finalised. After the Merger is finalised, the new MDO s insurer will write to you regarding your next renewal. Brokers and agents What plans are in place to communicate this information to clients? All members and clients will be contacted by their respective MDO as part of the proposed Merger approval process. How will the Merger impact on clients? We will keep clients informed throughout the Merger process about how it will affect them and about the benefits and opportunities that the new MDO will offer them. Will Brokers and Agents continue to receive the same level of commission? Current contractual arrangements will continue until the Merger is completed. After the Merger and before the expiry of the current contracts, the new MDO will be in touch with all brokers and agents. Who in the new organisation will be handling existing business? Until the Merger is finalised your business will continue to be managed in the same way as they are now with either or both organisation contacts. When the Merger is finalised we will be in contact with you to ensure that you are kept informed of any changes including details of who will be managing your account. If Clients of Brokers or Agents have any questions who should they contact? Until the Merger is finalised please approach either organisation in the same way as you have in the past. When the Merger is finalised we will be in contact with you to ensure that you are kept informed of any changes. - Will Broker or Agent agreements be continued or renegotiated? If renegotiated, who with? Current contractual arrangements will continue until the Merger is completed. After the Merger and before the expiry of the current contracts, the new MDO will be in touch with all brokers and agents. - What happens when a Broker or Agent deals with both MDA National and MIGA? Are there any protocols for how Brokers or Agents make a recommendation or is it business as usual? It will be business as usual until any merger is finalised our organisations remain competitors until that point. Following completion of the Merger, a process and protocol update will be communicated so you are aware of any new arrangements. Thursday, 27 March 2014 Page 8 of 9

9 Suppliers - Will current suppliers contracts be continuing, assigned or renegotiated? Current contractual obligations will be met. - Who in the new organisation will be handling the various supplier accounts? We will advise you in due course of your relevant contact. - For suppliers such as lawyers, how will these matters be continued? Will dealings continue with the same claims managers? Current suppliers will be utilised as normal until the Merger. After which, the decisions on which suppliers will be utilised will be decided. This will provide the opportunity for the new organisation to ensure best practice and service selection from existing suppliers. Thursday, 27 March 2014 Page 9 of 9