IPEC seeks jurisdiction over medical aid societies

Kudakwashe Mhundwa Business Reporter
The Insurance and Pension’s Commission has made case to Government for medical aid societies to be placed under its regulatory purview to improve governance and protect policyholders’ funds.

This comes after thousands of policy holders have been struggling to get medical services on fully paid up schemes due to the high prevalence of corporate governance malpractices including corruption, misappropriation of funds and revenue leakages.

IPEC commissioner Tendai Karonga said the regulator was negotiating with industry players and Government to develop a framework to regulate the medical aid insurance industry whose estimated value is around $340,2 million.

“We are engaging authorities to explain our position that we are legally mandated to regulate insurers and have the capacity to regulate medical insurance for the benefit of policyholders, service providers; ensuring that the industry grows.

“There is need to avoid fragmentation in regulation because the negative effects of that are costs and variations in standards, which could prejudice taxpayers and members of these medical aid organisations,” said Mr Karonga.

Debate over the regulation of the medical aid industry has been raging since the Ministry of Health and Child Care tabled a motion before Parliament seeking to set up a regulatory body, which would operate under the ministry and be regulated by it.

Mr Karonga said IPEC was a statutory body set up to regulate the insurance industry in Zimbabwe and by law should regulate medical insurers, as it was not different from all the other insurance businesses being regulated under the commission.

Regulation of the medical aid insurance has sparked a lot of debate in recent years as disputes in the industry have remained unresolved due to lack of effective regulation.

A case in point is that of Cimas and Corporate 24 where the former argued that its customers should pay cash upfront when getting treatment at the medical facility. By law, subscribers holding valid medical aid cards are not supposed to pay cash as it defeats the whole purpose of medical aid insurance.

However, Cimas (which is the second biggest player after PSMAS) says Corporate 24 has been submitting fraudulent claim forms. The Ministry of Health and Child Care, as current regulator, has failed to resolve the dispute

Often parties consider the ministry to be an unfair arbiter and experts say by virtue of its centrality to both individual and collective health of its subscribers, disputes in the medical insurance business have to be solved timeously through a regulator.

“It is not about IPEC having an appetite to regulate medical aid schemes, but the legal provision that establishes IPEC through an Act of Parliament-the Insurance and Pensions Commission (Chapter 24:21), which on Part 11 (4) (1) states that, the functions and powers of the Commission shall be, “(a) to register insurers, mutual insurance societies and insurance brokers in terms of the Insurance Act (Chapter 24:07) and subject to the Act, to regulate and monitor their business.

“It is evident that medical aid societies offer insurance service to their members who transfer the risk of personally paying for their medical bills to the health care insurer by paying premiums,” he said.

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