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Thursday, October 1, 2009
Setting the record straight

Comments by the Council for Medical Schemes (CMS) about the conduct of healthcare intermediaries have drawn strong criticism from the Financial Intermediaries Association of Southern Africa (FIA) and intermediary community.
At yesterday's launch of the CMS' latest annual report, Patrick Matshidze, CMS Registrar, stated that there is "particular concern about the presence of unscrupulous medical aid brokers who render non-value services."
Says Linza van Aswegen, chairperson of the FIA's Healthcare Benefits Committee, "While this may hold true for a minority of healthcare intermediaries, this is not the case for the majority of financial advisors in the industry who work hard to add value and offer a meaningful service to thousands of consumers. It is unfair to make such a generalisation and one which could mislead members of the public to believe that all intermediaries were under suspicion of poor conduct."
The value that the healthcare intermediary adds to medical scheme members and prospective members should not be underestimated says Van Aswegen.
"Medical schemes are fraught with technical terminology, complex terms, limits and different benefits, a wide range of codes that are allocated to various medical procedures and many other components which only a specialist in this area will be able to interpret and explain properly," she adds.
The FIA also wishes to clarify Matshidze's reference to high broker or intermediary commissions. For several years now, commission has been regulated by the Minister of Health and is limited to either R60,70 plus VAT per member per month or 3% of the monthly contributions to the scheme plus VAT - whichever amount is the lesser of the two. The maximum amount per member has not yet been adjusted for inflation in 2009 (an increase is allowed for in legislation).
With regard to the prevailing misperception that intermediaries churn policies in order to bolster their commission, the public should be made aware of the fact that in instances where a medical scheme member transfers from one scheme to another, the commission due to the intermediary from the original scheme ceases to be paid altogether and payment is then picked up by the new scheme. "The intermediary does not benefit financially by moving a member from one scheme to another," she points out.
Intermediaries are subject to a code of conduct outlined under the Financial Advisory and Intermediary Services Act, while healthcare intermediaries are also regulated by requirements set out by the CMS. In addition, all members of the FIA are bound by a strict code of ethics.
"FIA intermediaries are committed to assisting the consumer to make informed decisions regarding medical schemes and health insurance products," says van Aswegen.

Copyright © Insurance Times and Investments® Vol:22.10 1st October, 2009
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