Apenpdix 1: Run-Off Cover support payments
A.1.1 ROC support payments are paid to DHS in the form of an annual lump sum imposed as a tax on each insurer (currently MIGA is the only insurer) from 1 July 2010.
A.1.2 The amount of ROC support payments is calculated as a percentage of premium income received from contributing midwives. The calculation rules are set out in the ROCSPA and regulations. The tax imposed on each insurer is the applicable percentage of the insurer’s premium income (section 7) for the applicable contribution year ending on 30 June or an alternative date specified in the regulations (section 5).
A.1.3 Under section 7, an insurer’s premium income for the purpose is the sum of all of the premiums paid to the insurer for midwife professional indemnity cover provided for eligible midwives by contracts of insurance with the insurer, reduced according to the formula:
Premium income equals
Net premium — Net premium × Applicable percentage ÷ (1 + Applicable percentage)
A.1.4 Net premium is calculated according to section 7 as follows:
- sum of all premiums paid to the insurer during the operation of the Scheme for midwife professional indemnity cover provided for eligible midwives;
- minus the amount of GST payable (subsection (2)(a)) and the amount of stamp duty payable (subsection (2)(b)) in relation to the premiums; and
- plus/minus other payments specified in the regulations.
A.1.5 For premium payments relating to 2016-17, the applicable percentage is specified in the regulations as 10 per cent for all insurers, and thus the ROC support payment will be calculated as net premium x 10 per cent ÷ 1.10.