Finweek English Edition - - COVER STORY -

MO­MEN­TUM HEALTH’S prod­uct de­vel­op­ment ac­tu­ary, Hannes Boshoff, high­lights im­por­tant facts on this de­bate:

Boshoff says that med­i­cal schemes are gen­er­ally highly reg­u­lated, mean­ing that con­sumers are well pro­tected, but that is not the case with med­i­cal gap cover. “Un­der the med­i­cal scheme’s act, mem­bers are pro­tected against price risk, ac­cess to providers as well as what is cov­ered. The gap insurance leg­is­la­tion does not ad­dress any of this, and peo­ple must be very care­ful be­fore pur­chas­ing gap cover.”

Some gap providers don’t cover pre­scribed min­i­mum ben­e­fits, which the schemes are legally re­quired to cover, he says. “Many of the big­ger schemes have net­works in place, where mem­bers are fully cov­ered when util­is­ing th­ese providers for such ben­e­fits. Should a mem­ber make use of pro­fes­sion­als out­side this net­work, then gap cover does not pay. De­pend­ing on the schemes and op­tion struc- ture, typ­i­cally be­tween 60% and 70% of money is spent on pre­scribed min­i­mum ben­e­fits, so the ac­tual value of a gap prod­uct can be sig­nif­i­cantly dif­fer­ent, de­pend­ing on which med­i­cal scheme and op­tion you buy it with.”

Boshoff is of the opin­ion that, in gen­eral, gap prod­ucts are harm­ful to med­i­cal schemes since they com­pete against the higher-value op­tions with­out be­ing sub­ject to the same strict rules as med­i­cal schemes. “This im­pact is grad­ual and is be­com­ing more ac­cen­tu­ated as the pop­u­lar­ity of gap prod­ucts in­crease. This is not in the best in­ter­est of the con­sumers of med­i­cal schemes, but for some in­di­vid­u­als, gap cover would make sense nev­er­the­less,” he says.

The in­sur­ers that of­fer gap cover prod­ucts are of­ten partly owned by bro­kers try­ing to sell them, mean­ing the bro­ker has a sig­nif­i­cantly higher in­ter­est in a con­sumer buy­ing the prod­uct than just the com­mis­sion earned and may also share in the prof­its.


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