The Impact of the Health Market Inquiry on Brokers and Clients
Health Market Inquiry (HMI) Report
The final Health Market Inquiry (HMI) report was released on Monday, 30 October 2019. This report is the result of 5 years of work and an extensive consultation process. In this regard, the Financial Intermediaries Association of Southern Africa (FIA) made written proposals and appeared before the committee.
The HMI rightfully recognised that the role of the broker is not merely to introduce members to a medical scheme but also to provide ongoing advice. Furthermore, the broker educates the members on their rights and obligations.
The HMI further noted that the broker is actively involved in protecting the rights of members. We were also encouraged by the HMI’s observation that a broker is actually paid by the member. This clearly supports the FIA’s long-held view that the broker is providing a service to the member.
Two recommendations were made that we found troubling
The HMI expressed concern about the impact that loyalty programmes and additional products can have on the independence of brokers. Two recommendations were made that we found troubling:
- Firstly, that members of medical schemes must be afforded an opportunity to opt out of their medical schemes on an annual basis. This is already a right in terms of Regulation 28(7) of the regulations promulgated in terms of the Medical Schemes Act; and
- Secondly, that members must receive a discount if they choose to opt out of using a broker. This proposal will only to serve to further complicate contribution tables.
What this means for Brokers
For brokers, the main takeaway from the HMI proposals is that we will need to continue to deliver value to our clients and that we will be required to be innovative in this regard. Furthermore, we need to protect ourselves against opportunistic behaviour on the part of members, such as only appointing a broker when they need advice or protection of their rights and then terminating their membership once their immediate need has been met.
We will be obliged to constructively engage with the regulator if these recommendations are implemented. Until then, we need to be alert and proactive in providing our clients with the level of service we ourselves would wish to receive were our positions to be reversed. In this way, we can make a compelling case for clients to continue to regard broker services as an ongoing rather than an ad hoc engagement.
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