Gauteng High Court order asserts CMS powers to place Sizwe Hosmed under provisional curatorship
The Council for Medical Schemes (CMS) welcomes the Gauteng High Court judgment delivered by the Honourable Madam Judge Manamela to place the Sizwe Hosmed Medical Scheme (Sizwe Hosmed / the Scheme) under provisional curatorship, and to appoint Ms Lebogang Grace Mpakati as the provisional curator.
It is common cause that Sizwe Hosmed has been experiencing financial difficulties in that its solvency level has declined to a level far below the statutory requirement of 25%. The Scheme was also recently informed by the South African Local Government Bargaining Council that it had not been granted accreditation to market the scheme and benefit options to local government employees for the 2026 year.
The CMS is obliged by law to follow and apply the MSA. The CMS is of the opinion that the appointment of the Curator is in the best interests of the beneficiaries of the Scheme and that it is desirable to do so for the reasons more fully articulated below.
Sizwe Hosmed is duly registered as an open medical scheme in terms of section 24 of the Medical Schemes Act, no 131 of 1998 (the MSA), and was established through the amalgamation of the Sizwe Medical Fund and Hosmed Medical Scheme on 1 November 2021. At the time of the amalgamation, the combined solvency level was recorded at 36.5%. By November 2022 the solvency had declined to 25.45% (just above the statutory required level).
The solvency level had declined to below 25% early in 2023, and the scheme was required to submit a detailed business plan in accordance with Regulation 29 of the Regulations to the MSA. The first three business plans submitted, on 10 February 2023, 28 April 2023, and 10 October 2023, respectively, were rejected due to inadequate information as well as inaccurate forecasts and assumptions compared to the actual experience. The fourth business plan submitted on 23 September 2024, after the Scheme had changed its actuaries, was finally approved on 4 December 2024.
The Scheme was placed under Statutory Management in terms of section 5A(1)(a) read with subsection (2) of the Financial Institutions (Protection of Funds) Act, no 28 of 2001 effective from 11 July 2024. The appointment of the Statutory Manager was to ensure that:
• The Scheme complied with the law;
• The Scheme becomes financially sound; and
• The Scheme is properly administered.
The Statutory Manager provided regular reports to the CMS with regard to progress made, if any, by the Scheme in terms of the above. Whilst there seemed to have been some slight improvements noted, his June 2025 report concluded that the Scheme was in a poor financial state and that the implementation of remediation actions was essential.
The Statutory Manager’s August 2025 report, dated 15 August 2025, concluded that the Scheme was facing severe financial and operational distress, marked by critical solvency issues, regulatory non-compliance, member losses, and unsustainable claims.
The Scheme’s reported solvency levels for June and July 2025 were only 5.6% and 6.62% respectively. The CMS is of the view that the significant drop in the solvency and deviation from the budget has an adverse impact on the reliability of the business plan previously approved and the ability of the Scheme to reach its year-end target and remain technically solvent.
In order to protect the best interests of beneficiaries, the CMS has had to act swiftly and therefore brought the curatorship application on an urgent basis. The Curator will replace the whole of the Board of Trustees and will work under the direction of the CMS.
The provisional curator, Ms Lebogang Grace Mpakati, will be expected to investigate Sizwe Hosmed’s financial position and advise on viable solutions, including the future of the scheme, namely merger, liquidation, or continued existence, and the terms thereof.
