CURE OR CURSE? REGULATIONS ON THE DEMARCATION BETWEEN HEALTH-INSURANCE POLICIES AND MEDICAL SCHEMES

Daleen Millard Daleen Millard

doi:10.17159/obiter.v33i2.12156

Abstract

In South Africa, private insurance policies are regulated by the Long-term Insurance Act and the Short-term Insurance Act. Medical schemes fall under the Medical Schemes Act (131 of 1998) and yet, despite the fact that there are three dedicated statutes that deal with the risks relating to ill health, it seems that the distinction between insurance products and medical-scheme benefits isnot so clear. On 2 March 2012 National Treasury published the proposed amendment of regulations made under section 72 of the LTIA and under section 70 of the STIA. These are jointly referred to as the “Demarcation Regulations”. This note provides an overview of these proposals against the background of the difference between insurance business and medical-schemes business. In addition, itinvestigates the policy principles that informed the Demarcation Regulations and comments on the impact of those on the insurance industry and on medical schemes.

Highlights

In South Africa, private insurance policies are regulated by the Long-term Insurance Act (52 of 1998, hereinafter “LTIA”) and the Short-term Insurance Act (53 of 1998, hereinafter “STIA”)
On 2 March 2012 National Treasury published the proposed amendment of regulations made under section 72 of the LTIA and under section 70 of the STIA (“Long-term Insurance Act, 1998: Publication of Proposed Amendment of Regulations made under Section 72 for Public Comment” GG 35114 of 2 March 2012; and “Short-term Insurance Act, 1998: Publication of Proposed Amendment of Regulations made under Section 72 for Public Comment” GG 35114 of 2 March 2012)
For purposes of paragraph (b) of the definition of “accident and health policy” in the Short-Term Insurance Act, there are seven new categories of accident and health policies and a contract will only be an accident and health policy if that contract matches any of these categories of contracts (regulation 7.2 (1) of the Demarcation Regulations (STIA))

Summary

Introduction

In South Africa, private insurance policies are regulated by the Long-term Insurance Act (52 of 1998, hereinafter “LTIA”) and the Short-term Insurance Act (53 of 1998, hereinafter “STIA”). On 2 March 2012 National Treasury published the proposed amendment of regulations made under section 72 of the LTIA and under section 70 of the STIA (“Long-term Insurance Act, 1998: Publication of Proposed Amendment of Regulations made under Section 72 for Public Comment” GG 35114 of 2 March 2012; and “Short-term Insurance Act, 1998: Publication of Proposed Amendment of Regulations made under Section 72 for Public Comment” GG 35114 of 2 March 2012). It investigates the policy principles that informed the Demarcation Regulations and comments on the impact of those on the insurance industry and on medical schemes

Insurance business and medical schemes

Underlying policy principles

Summary of Draft Regulations

Findings

POLICY BENEFITS