Regulator places Sizwe Hosmed Medical Scheme under statutory management
By joint agreement, the Council for Medical Schemes (CMS) has placed the Sizwe-Hosmed Medical Scheme under statutory management, in terms of Section 5A of the Financial Institutions (Protection of Funds) Act 28 of 2001 ("FI Act") Protection of Funds Act.
The agreement by the Board of Trustees and CMS to place the Scheme under statutory management is to enable the two parties to work together to stabilise the Scheme, ensure its sustainability and protect the interests of Sizwe Hosmed beneficiaries
In 2021, Sizwe Medical Fund and Hosmed Medical Scheme merged resulting in the Scheme amassing combined reserves of R1.4 billion and a solvency level of 49.4%. However, the Scheme’s performance has continued to deteriorate i.e., the deterioration of financial reserves due to several reasons including benefit under-pricing and historically unreliable budgetary and forecasting processes.
Both parties agree that the Scheme has a solid and good member profile, many of whom are young.
It is important to note that this process is not a curatorship where the affairs of the Scheme are run solely by a Curator. It is a statutory management intervention where CMS and the Board of Trustees will be jointly running the Scheme.
Therefore, CMS strongly advises accredited healthcare brokers and brokerages to refrain from taking any drastic measures that could potentially harm both the members and the Scheme.
By mutual agreement, CMS and the Sizwe Hosmed Board of Trustees have appointed Mr Joe Seoloane as the Scheme’s Statutory Manager with immediate effect. In arriving at this decision, the CMS Registrar took into consideration the fact that Mr Joe Seoloane was already appointed by the Board of Trustees to assist the Scheme with a turnaround strategy.
In terms of Section 5A (5) of the FI Act, Mr Joe Seoloane must advise the office of the Registrar on steps to be taken to ensure that the Scheme:
(i) complies with the law;
(ii) becomes financially sound; and
(iii) is properly administered.
Mr Seoloane will be responsible for assisting the Scheme to comply with Regulation 29 of the MSA including measures to reconstitute its Board of Trustees in line with the MSA and the Scheme rules. Further, he will also be expected to ensure that all the circumstances which led to the non-compliance with Regulation 29 are fully investigated and reported to the Office of the Registrar.
The CMS urges Sizwe Hosmed members to remain with the scheme as this regulatory intervention is to ensure that the Scheme complies with the minimum statutory solvency requirements.
