National Treasury
STDemarcation@treasury.gov.za
COMMENT ON THE PROPOSED AMENDMENT OF THE REGULATIONS TO THE SHORT-TERM INSURANCE ACT 1998, AS AMENDED.
Introduction
Alexander Forbes Health (Pty) Limited (“Alexander Forbes Health”) is a wholly owned proprietary company of Alexander Forbes Financial Services Holdings (Pty) Ltd. Alexander Forbes Health is an authorised Financial Services Provider and is accredited with the Council for Medical Schemes (“CMS”). As a leading corporate healthcare consultancy in South Africa, Alexander Forbes Health delivers healthcare consulting advice and member support services to 490 corporate clients including 185,000 individual members, of which approximately 44,000 (24%) have voluntarily purchased gap cover products. Alexander Forbes Health also provides actuarial and technical consulting services to 11 restricted and 1 open medical scheme, covering 670,000 principal members in total.
Alexander Forbes Health welcomes the opportunity to provide a submission on the proposed amendment of the regulations to the Short-Term Insurance Act aimed at facilitating a clear demarcation between what constitutes health insurance business and what constitutes the business of a medical scheme. This demarcation is achieved by identifying certain categories of contracts as health policies to be excluded from the medical schemes regulatory environment and regulated under the Short-Term Insurance Act.
Alexander Forbes Health supports the need for a clear demarcation between accident and health insurance policies and medical schemes in order to protect the principles of community rating, open enrolment and cross-subsidisation entrenched in the Medical Schemes Act and acknowledges that in the absence of such a demarcation consumers may mistakenly believe that accident and health policies offer the same level of protection as a medical scheme or are in fact medical schemes or substitutes thereof.
Furthermore Alexander Forbes Health supports the need to identify categories of health policies which will not undermine medical schemes and for policy benefits, marketing activities, disclosure and reporting requirements to be prescribed in a fair and reasonable manner.