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Sibongile Maruta Herald Reporter
The Insurance and Pensions Commission (IPEC) has put in place a number of measures to ensure that medical and legal aid schemes under its supervision do not abuse members’ contributions. IPEC also wants to ensure that the medical and legal schemes also add value to their members’ contribution.
The schemes are now required to undergo actuarial valuations, maintain sufficient reserves to enable them to fulfil their obligations, put in place sound and sustainable pricing practices, adhere to good corporate governance and treat their customers fairly through enhanced public disclosure.
In an interview, IPEC acting commissioner Mr Blessmore Kazengura said they had the right skills mix to regulate all forms of insurance businesses. He said they had insurance and pension experts, actuaries, economists, accountants, investment analysts, legal practitioners, information communication technology experts and others with risk management background.
“In terms of the regulatory framework, we already have provisions in the Insurance Act (Chapter 24:07), particularly sections 11 to 21 that deals with mutual societies. This means that the legal framework enabling the regulation of Medical Aid Societies is in place though there will be need for some amendments to both the Medical Services Act and the Insurance Act. On the part of Legal Aid Societies, the Commission has already come up with a Micro-insurance Framework and we anticipate that the regulation of Legal Aid Societies will fit perfectly under the micro insurance framework,” he said.
Mr Kazengura said lack of prudential supervision and regulation, has led to compromise serviced delivery and protection of policy holders.
“You may be aware that some policy holders were having raw deals with medical service providers demanding cash up front and in some cases policyholders being asked to pay high short falls. Medical and legal aid schemes are currently not being prudentially supervised to ensure that they remain sound to meet members’ obligations as they fall due.
“On the part of legal aid societies, all of them are not registered and regulated at the moment. This means that there is no oversight of these entities, as such policyholders are living at the mercy of those managing these firms. Bringing them under regulation will ensure that their operations are supervised to ensure they are financially sound to meet customer obligations and to treat them fairly,” he said.
He said health insurers will no longer be able to practice regulatory arbitrage. “In the past some health insurers who failed to meet regulatory requirements under IPEC would go and register under the Ministry of Health and Child Care. By so doing, they will be taking advantage of the regulatory loopholes to continue in existence yet they may not be fit to provide health insurance,” he said.
Mr Kazengure also said the fact that the regulation is now being put under one regulator with rigorous reporting and monitoring mechanisms had closed the loophole, eliminated fragmentation of regulation and removed regulatory arbitrage. “This move will also prevent duplication of resources by Government and ensure consolidation of regulation, which will in turn result in savings on taxes collected by Government,” he said.
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