Important issues for insurance sector come under spotlight

Does South Africa need National Health Insurance? And are the reasons for moving ahead with it the right ones?

These were some of the key questions asked by health economist, Alex van den Heever of the University of Witwatersrand, at the recent INSETA Compliance event, which brought together key industry players in Johannesburg; KZN and Cape Town for discussions on pressing issues such as the National Health Insurance (NHI), the Financial Advisory and Intermediary Services Regulatory Exams (FAIS) exams, and Micro insurance Discussion Paper which will affect skills development planning in the insurance sector.

The government is considering the introduction of a NHI, but there is still no consensus regarding the model and funding of the scheme; implementing this initiative will require substantial reforms which are still some way off.

Van den Heever, speaking at the INSETA event, raised questions around whether the NHI was being considered for the right reasons and if the right research is being used in the right way. He said, for example, that the NHI document cited national health insurance figures in countries that have no NHI. Japan, Taiwan, Chile, Thailand and South Korea were cited as NHI countries where there have been economic and social benefits. However, only Taiwan and South Korea have implemented NHI.

Furthermore, he said that while certain information in the document was accurate, on closer inspection, other points were questionable.

For example, he said, the document stated that “57% of health spending flowed via private health insurance contributions (44%) and out-of-pocket spending (13%). If the poor did not have to spend this 13% on out-of-pocket expenditure, they would either save it or spend it on other goods and services”. He pointed out that: “most out-of-pocket spending in South Africa is by medical scheme members and not the poor, as the public sector provides free services.”

Van den Heever said that in order to integrate an improved healthcare system in South Africa we would need to more carefully examine the current situation. In previous years reforms had been proposed that in his opinion were far more viable options for South Africa, but had not been taken past the stage of consideration. “We need to ask the question ‘what’s wrong?’, and ensure that treatment fits the diagnosis,” said Van den Heever.

Adding her comments at the recent INSETA Cape Town event, which served as a FAIS compliance indaba, Sharon Snell, Chief Operating Officer of INSETA, said that the debate raised by the speakers’ points was lively and that it was positive to see the insurance industry grappling with key issues in an open way.

In a continued move to ensure that those involved in the financial advice and intermediary services are fully informed and ethical in their undertakings, the event also reaffirmed the importance of the Financial Advisory and Intermediary Services (FAIS) regulatory exams, and identified some of the difficulties faced by those studying towards the exams and how best to overcome these.

The Level 1 (RE1) exam, which is compulsory for anyone who provides financial advice and intermediary services, tests regulatory compliance and needs to be passed by 31 December 2011. The Level 2 (RE2) exam focuses on specific financial products and needs to be passed by 31 December 2013.

Some of those required to pass the exams have advised that the deadline imposed for passing of the exams is too short, and that the questions asked in the exams themselves are overcomplicated.

“The FAIS act falls under financial law, and while in some instances this may be the case, there is no reason that this should impede passing the exams; it just requires the proper application on every student’s part,” said speaker Professor Daleen Millard, Associate Professor at the University of Johannesburg and co-author of “The FAIS Act Explained”.

Paull Lawrence, representing Moonstone Intellectual Capital, impressed upon the assembled audience that the study material, as well as access to the exam venues themselves were organised for maximum convenience and ease of accessibility. Moonstone isan officially recognised body and empowered by the Financial Services Board to handle both Category I and II license applications.

“Multiple venues, as well as different methods of writing the exam, including an electronic exam option, have been put in place to help ensure that all those required are able to complete the exams to the best of their abilities,” explained Lawrence.

Snell said that the INSETA Compliance Breakfasts have been extremely well-attended and provided a platform for industry to engage in constructive dialogue on key legislative changes affecting the insurance industry. INSETA was able to receive early signals on potential skills needs facing the insurance industry.