1 REPORTBACK ON INSURANCE LAWS AMENDMENT BILL (2008) PORTFOLIO COMMITTEE ON FINANCE 6 JUNE 2008

2 STRUCTURE OF PRESENTATION Process of consultation Demarcation between health policies and medical schemes Binder agreements Technical amendments

3 Various meetings with insurance industry and intermediary bodies prior to the Bill (including on conflicts of interest and ‘white-label’/’binder’ arrangements) Intensive consultation process since release of Bill Meetings with DoH and CMS on demarcation Meetings with industry/intermediaries on binder agreements Welcome opportunity for further consultation Proposed workshop with commentators to finalise aspects CONSULTATION

4 Guiding principles: Demarcation should not undermine the purpose and objectives of the Medical Schemes Act Jointly agreed demarcation will allow health insurance policies regulated solely i.t.o. the ST or LT Insurance Act Demarcation regulations: By Min of Finance in consultation with Min of Health After consultation with CMS and FSB Info on health policy products must be filed with both Registrars Enforcement process on breach of regulations followed by Registrars in terms of their respective Acts Definition of business of a medical scheme in the Medical Schemes Act DEMARCATION BETWEEN HEALTH POLICIES AND MEDICAL SCHEMES

5 Guiding principles: Recognition of various forms of binder arrangements Inter-relationships with broader policy reform processes Scope of binder arrangements: Clarified to cover outsourcing arrangements that create or vary a liability for an insurer Retained scope of written agreement and retention of insurer liability and ownership of information Regulations dealing with classes of binder arrangements - and allowable remuneration and structures by class of binder Explicit provision for formal consultation on regulations BINDER AGREEMENTS

6 Auditor: Retained requirement to report to Registrar all contraventions Statutory actuary: Requirement to report to Registrar limited to those sections in the Act that the statutory actuary is responsible for Valuation of assets: Clarified the right of Registrar to seek a ‘reasonable value’ on certain assets for statutory purposes Use of derivatives: Clarified that may hold an open-position, but only for purposes of managing investment risk, and only with written agreement of statutory actuary TECHNICAL AMENDMENTS