Why have the payment arrangements changed for the medical malpractice insurance policy?

For many years (all 18 years that I have been the broker for various Associations/Societies), we have not experienced any problems with our Associations/Societies, collecting membership fees from their members and then paying across the premium due in respect of medical malpractice insurance cover for those members under the CFP Brokers Medical Malpractice Scheme Policy. This arrangement has always been supported by the underwriters and insurers that we have placed the cover with.

It has always been the case that only a licenced financial services provider could perform intermediary services, which includes the collection of premiums. We sought advice from our own compliance officer with regard to whether or not our associations collecting membership fees and then paying for cover for their members would be seen to be a contravention of this requirement and our compliance officer advised that it would not be (and they in turn had confirmed this with their own legal advisor who is familiar with the FSCA/FAIS/regulatory requirements).  Our compliance officer’s opinion on this matter was supported by the Head of Legal at Hollard. He indicated that as far as Hollard were concerned our Association/Society clients were in no way collecting premiums, they were collecting membership fees and paying across a premium on their members’ behalf, which as a joint-insured, Hollard indicated, the Associations/Societies were entitled to do.

CFP Brokers has been advised that the Financial Sector Conduct Authority (The FSCA) does not accept the payment arrangements that we have had in place in the past decade or more, with regard to our members’ medical malpractice insurance. In order to ensure that your Association/Society is not exposed to regulatory sanction and potential fines from the FSCA (which can be up to R10 million), your Association/Society will no longer be able to pay for this cover on our members’ behalf. You can continue to take out the CFP Brokers Medical Malpractice Scheme cover which you have previously had as part of your membership benefits with your Association/Society but you will be invoiced for your medical malpractice cover directly by CFP Brokers, who are authorised financial services providers, should you elect to continue your cover with us.

We confirm that all current paid-up members of our various Association/Society clients who qualify for the cover, under our CFP Brokers Medical Malpractice policy, are currently covered and will continue to enjoy cover under our policy until 31 December 2020 (subject to remaining a paid-up members of their Associations/Societies in good-standing until 31 December 2020).

Going forward, CFP Brokers will continue to offer paid-up members of the various Associations/Societies discounted premiums for their medical malpractice insurance cover.

 

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