Three Pillars of Insurance

Transcription

1 Three Pillars of Jason Gordon Jason Gordon This presentation has been prepared for the 2016 Financial Services Forum. The Institute Council wishes it to be understood that opinions put forward herein are not necessarily those of the Institute and the Council is not responsible for those opinions.

2 Three Pillars of Coverage UNIVERSAL LEGISLATIVE MANDATE / PROFESSIONAL COMPULSION VOLUNTARY Supplement Supply Government Mandate Supplement Demand Professional Compulsion Public Health Medical Benefits Hospital Cover Terrorism Reinsurance on Commercial Property Workers Compensation Compulsory Third Party Private Health Aviation Professional Indemnity Medical Life Home & Contents Travel

3 Three Pillars of Coverage UNIVERSAL LEGISLATIVE MANDATE / PROFESSIONAL COMPULSION VOLUNTARY Access Supplement Supply Government Mandate Supplement Demand Professional Compulsion Highest Distribution Risk Public Health Medical Benefits Hospital Cover Terrorism Reinsurance on Commercial Property Workers Compensation Compulsory Third Party Private Health Aviation Professional Indemnity Medical Life Home & Contents Travel

4 as a Public Good A public good is a product/service that one individual can consume without reducing its availability to another individual and from which no one is excluded For example national defence, lender of last resort Impossible to charge a price for a public good

5 Three Pillars of Coverage UNIVERSAL LEGISLATIVE MANDATE / PROFESSIONAL COMPULSION VOLUNTARY Public Health Medical Benefits Hospital Cover Supplement Supply Terrorism Reinsurance on Commercial Property Government Mandate Workers Compensation

6 History of Health Principles emphasised in second reading of Medibank Legislation 1973 Social Equity Universal Coverage Cost Efficiency Freedom of choice and flexibility It (Medibank) is indeed a program which must cause this parliament to decide whether health care is to be a privilege to be purchased or a right to be enjoyed equally by every Australian.

7 Universal Hospital Cover Queensland 1944 Tasmania History of Health Universal Medical Benefits National Health & Pension Bill 1938 our main immediate task as a government represents defence in a twofold sense the building up of our national defence against possible aggression and the building up of the defences of the individual Australian family against the unexpected emergencies of life.

8 Health Timeline WWI National Health Bill 1938 Hospital Benefits Act 1945 Pharmaceutical Benefits Act 1948 Voluntary 1952 National Health Services Act 1953 Federation 1901 Great Depression 1929 Pharmaceutical Benefits Act 1944 Referendum s51(xxiiia) 1946 National Health Services Act 1948 Hospital Benefits Scheme 1952 Labor Government Liberal Government

9 History of Health Voluntary System Nimmo Committee 1969 Operation of the health insurance scheme is unnecessarily complex and beyond comprehension of many; Benefits received by contributors are frequently much less than the cost of hospital and medical treatment Contributions have increased to such an extend to be beyond the capacity of some members of the community and involve considerable hardship for others An unduly high proportion of the contributions is absorbed in operating expenses The level of reserves held by some organisations is unnecessarily high. Committee flirted with universal coverage, only within a voluntary scheme

10 Health Timeline Federal Election 1969 Federal Election 1972 Legislation Defeated in Senate December 1973 Federal Election May 1974 Joint Sitting of Parliament 6/7 August 1974 WA VIC August 1975 NSW October 1975 Whitlam s National Health Scheme 1968 The Mason Inquiry 1972 Medical Fees Tribunal 1973 Legislation Defeated in Senate April 1974 Legislation Defeated in Senate July 1974 TAS / SA 1 July 1975 Dismissal November 1975 QLD September 1975

11 Terrorism Coverage Terrorism Bill 2002: Explanatory Memorandum financiers and investors face uncertainty that could result in adverse economic circumstances, delaying commencement of investment projects The development of the Scheme followed calls from the community for the Government to intervene in an area of clear market failure The compulsory application of the Bill to all eligible insurance contracts is essential to allow accumulation of a credible funds pool within a reasonable period. Universal terrorism insurance is also designed to avoid problems of undiversified risks and uncertainty as to who will be eligible for compensation in the event of a terrorist act. The Government s objective is to operate the Scheme only while terrorism insurance cover is unavailable commercially on reasonable terms.

12 Terrorism Coverage Terrorism Bill 2002 The Government decided that any intervention would need to be consistent with: the need to maintain, to the greatest extent possible, private sector involvement; ensuring that risk transferred to the Commonwealth is appropriately priced and that the Commonwealth is compensated by those benefiting from the assistance; allowing the re emergence of the commercial markets for terrorism risk cover; and global solutions.

13 Three Pillars of Coverage UNIVERSAL LEGISLATIVE MANDATE / PROFESSIONAL COMPULSION VOLUNTARY Supplement Supply Government Mandate Supplement Demand Professional Compulsion Public Health Medical Benefits Hospital Cover Terrorism Reinsurance on Commercial Property Workers Compensation Compulsory Third Party Private Health Aviation Professional Indemnity Medical Life Home & Contents Travel

14 Three Pillars of Coverage Longer Term Trends Welfare State Deregulation and free market liberalism Economies of Scale Planning Education Population Pyramid Technological Capability (e.g. administration)

15 Taxation and Representation

16 Taxation and Representation

17 Three Pillars of Coverage UNIVERSAL LEGISLATIVE MANDATE / PROFESSIONAL COMPULSION VOLUNTARY Supplement Supply Government Mandate Supplement Demand Professional Compulsion Market Failure Economic Activity History Political Capital Technological Capability Vested Interest Market Failure Contract Externalities Economic Activity Vested Interest Contract Externalities Vested Interest Long Term Industry Stability Rule of Law / Litigious Society Lack of Externalities Fluid view of Equity Relevance (e.g. workers compensation)

18 History of Health

19 History of Health

20 History of Health