Justus van Pletzen, CEO at the Financial Intermediaries Association of Southern Africa (FIA), provided a much needed perspective on the issue of the impact of broker commission on the cost of private healthcare.
This was in response to the Minister of Health apparently claiming that “…brokers are ‘not needed’ in the private healthcare sector.”
“The minister’s perceptions about medical scheme broker fees are fuelled by the deliberate exaggeration of the figures quoted in the Council for Medical Schemes (CMS) Annual Report, which lumps broker fees with all other distribution costs” says Van Pletzen.
“If the Minister wants to meaningfully reduce costs in the provision of private healthcare then he should focus elsewhere as brokers account for just 1.1% of the gross contribution income for medical schemes.”
In return for an average R51 per beneficiary per month the broker delivers a range of services to members including:
- A comprehensive and professional introduction to the client;
- Enter into a service agreement with the client;
- Gather client information;
- Conduct a financial needs analysis and prepare a client proposal;
- Present the proposal to the client;
- Provide intermediary services to ‘link’ the client to a medical scheme;
- Render continuous financial services to the client;
- Handle client requests, enquiries and instructions on-going; Handle client complaints; and
- Handle client claims.
These services are required by law as set out by the Medical Schemes Act and the Financial Advisory and Intermediary Services (FAIS) Act. “Given the range of duties performed by brokers – as required by law – it could be argued that the current fee is inadequate,” says Van Pletzen.
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