eBusiness Weekly
Kudzanai Sharara
Medical aid schemes and legal aid societies will with effect from June 2019 be regulated by Insurance and Pensions Commission to ensure that the public is covered for medical treatment and hospitalisation that is promised, Finance and Economic Development Minister Mthuli Ncube said.In 2019 National Budget Statement presented last week, Minister Ncube said while medical aid schemes and Legal Aid Societies carry out insurance business in terms of the insurance legislation, the regulation and supervision of these entities, however, does not fall under the purview of Insurance and Pensions Commission (IPEC), the regulator of insurance businesses.
This lack of prudential supervision and regulation, Minister Ncube said, has the potential to compromise service delivery and protection of consumers of financial services provided by these institutions.
“In line with the policy thrust enunciated in the Transitional Stabilisation Programme to consolidate insurance regulation, with effect from June 2019, medical aid schemes and legal aid societies will be prudentially supervised by IPEC, to ensure the investing public is protected,” he said.
While Medical Aid Societies are currently regulated by the Ministry of Health and Child Care as provided for under the Medical Services Act, IPEC has, however, been arguing that they should be under its ambit.
Said IPEC: “Medical aid societies, which are insurance mutual societies as provided for in the current Insurance Act Chapter 24;07, are currently the biggest health insurers and yet they are unregulated when the Insurance and Pensions Commission (IPEC) is already empowered and capacitated to regulate the sector.”
The insurance regulator further argued that the country already has a legally binding commitment to ensure that the regulation of Medical Aid Societies is administered by insurance regulators in line with SADC’s regulatory framework for non-banking financial institutions (including insurance).
IPEC argued that the mooted Medical Aid Bill to create a separate medical aid regulatory body, as planned by the Ministry of Health and Child Care, “will set a dangerous precedent in which line ministries become free to form separate regulatory bodies for activities that can be supervised under other pre-existing government agencies”.
However, the latest move my treasury, seem to favour putting Medical Aid Societies under IPEC.
This is despite arguments put forward by players in the Medical Aid sector and the Ministry of Health who said IPEC does not possess the competence and credibility to warranty responsibility to regulate the sector.
“They have no credibility, actually, from where we are coming from a lot of people could lose their lives (due to their ineptitude),” said former Health and Child Care Deputy Minister Adrian Musiiwa last year.
He dismissed claims that medical aid societies were better off under IPEC due to limited actuarial expertise in the ministry.
IPEC has, however, argued that it has the capacity, saying “well-performing companies such as Old Mutual and First Mutual, which were mutual societies until recently, are already under its jurisdiction.”
