Press release -
Discovery Health response to Mr Richelo Killian’s complaint on News24 and Hello Peter
Discovery Health response to Mr Richelo Killian’s complaint on News24 and Hello Peter
Discovery Health is aware of a complaint posted on the mynews section of News24 and Hello Peter by Mr Richelo Killian earlier today. There are numerous inaccuracies and misleading statements in Mr Killan's post. Mr Killian’s concerns centre on the issues of late joiner penalties and non-disclosures of information, which we would like to address separately. Here are the facts on the issues raised by Mr Killian:
1. Late joiner penalties
In terms of the Medical Schemes Act, all medical schemes may and do apply late joiner penalties. In an open enrolment environment, where medical schemes are obligated by law to accept any applicant regardless of when they apply and their age or health status, the Medical Schemes Act provides medical schemes with the ability to apply late joiner fees to members’ contributions for joining a medical scheme later in life or after an extended break in membership. This protects the scheme against anti-selection – a situation in which a person elects to join a medical scheme once they have a serious medical condition or need medical treatment. Unless schemes can protect themselves against this practice, scheme contributions would escalate dramatically, making them unaffordable for all other members. The use of Late Joiner Penalties also encourages people to join schemes when they are younger and healthier. This is a vital element of cross-subsidisation between the healthy and the ill, and the young and the old, which is a fundamental principle on which the entire medical scheme system is predicated.
Depending on a new member’s previous medical scheme membership history, different late joiner fees may be applicable.
Mr Killian had not belonged to a medical scheme in South Africa since 2009, which is a gap of more than four years. A late joiner fee of 5% was therefore applied to his monthly contribution fee at the time of his joining DHMS in 2013. This is in line with standard industry practice for the reasons outlined above.
2. Non-disclosure of information
With regard to the non-disclosure of a pre-existing condition; we have checked our records which clearly show that Mr Killian indicated "NO" in response to the question concerning any previous ‘heart and circulation condition’ on his application form, as received on 4 June 2013.
All members personally sign the application form after consultation with their financial advisors in which they confirm that all the information is true and correct. Thereafter, we send a counter offer directly to the member confirming the terms of agreement and clearly stating any and all restrictions, such as late joiner penalties. Only once the member has signed this do we activate membership. Mr Killian personally signed his application form, and also signed the counter offer letter, and joined DHMS on 1 July 2013. This clearly indicates that he was aware of what prior health conditions he was and was not declaring at the time of his application.
On 9 September 2013, we received an application from our member’s healthcare provider for the Chronic Illness Benefit for his wife’s hypertension. However, on the application, the healthcare provider states that Mrs Killian was diagnosed for this condition in 2010. This should clearly have been disclosed on the application form, and the failure to do triggers cancellation of the membership in terms of the rules of the Discovery Health Medical Scheme.
There is a very good reason for this rule: in terms of the law, medical schemes are able to impose limited 3-month or 12-month waiting periods for pre-existing conditions, and this is once again a vital mechanism to allow medical schemes to protect themselves against anti selection by potential members who join only once they are aware that they need treatment, and in many cases, then leave the scheme once they have obtained the treatment. Honesty and full disclosure is critical to maintaining the long term sustainability and affordability of medical schemes. When a clear case of non disclosure of material information, as was the case here, comes to light, the rules of the medical scheme are applied consistently and rigorously. This rule was applied to Mr Killian, as a result of his failure to disclose a serious pre-existing chronic condition, and we do not have any grounds to treat his membership application differently to that of any other member.
Role and commission paid to healthcare advisors/brokers
Mr Killian makes inaccurate statements regarding the role and payments of financial advisors. The vast majority of these advisors are independent agents, and they are paid according to a regulated commission structure, with an upper limit specified by the Council for Medical Schemes.
Cases such as these highlight the importance of financial advisors and the crucial role they play in navigating the complexity of healthcare funding. These advisors are trained to assist consumers choose the medical aid and the specific plan that best suits their needs and budget, and to ensure that application forms are completed in full and honestly. It is important to note that the commission of financial advisors is legislated.
Dr Jonathan Broomberg
Chief Executive Officer
Discovery Health
Topics
Discovery information
About Discovery Limited
Discovery Limited is a South African-founded financial services organisation that operates in the healthcare, life assurance, short-term insurance, savings and investment products and wellness markets. Founded in 1992 by the current Group Chief Executive Officer Adrian Gore, Discovery was guided by a clear core purpose – to make people healthier and to enhance and protect their lives. Underpinning this core purpose is the belief that through innovation Discovery can be a powerful market disruptor.
The company, with headquarters in Johannesburg, South Africa, has expanded its operations globally and currently serves over 6.1 million clients across South Africa, the United Kingdom, the United States, China and Singapore. Vitality, Discovery’s wellness programme, is the world’s largest scientific, incentive-based wellness solution for individuals and corporates. The global Vitality membership base now exceeds five million lives.
Discovery is an authorised financial services provider. It is listed among South Africa’s Top 40 companies on the Johannesburg Securities Exchange and trades under the code “DSY”.
South African operations
Discovery Health
- Launched in 1992, Discovery Health isSouth Africa’s largest healthcare funder and manager of medical schemes. It manages 14 medical schemes.
- This includes the Discovery Health Medical Scheme, which has a 51% share in the open medical schemes market, making it South Africa’s largest open medical scheme.
- The Discovery Health Medical Scheme covers more than 2.4 million lives.
- The Scheme is the only one in South Africa to enjoy an AA+ rating for its claims paying ability, the highest possible credit rating from international rating agency Global Credit Ratings. The Scheme has maintained this rating for 12 consecutive years.
- The Discovery Health Medical Scheme holds over R8.2 billion in reserves.
- Discovery Health pioneered consumer-driven healthcare in South Africa with the introduction of innovations like the Medical Savings Account and its wellness programme, Vitality.
- Discovery Health is continuously innovating new products and tools to enhance the quality of care members receive, including HealthID, an iPad-based application for doctors launched in 2012. The HealthID application is also available on Android mobile devices.
- Discovery Health was voted the top medical aid brand in the Sunday Times Top Brands survey for both 2010 and 2011.
- Discovery Health was voted the top healthcare product supplier at the 2010, 2011 and 2012 Financial Intermediaries Association of Southern Africa (FIA) Awards.
- In 2012, the PricewaterhouseCoopers fifth biennial Strategic and Emerging Issues in South African Insurance survey rated Discovery Health’s insurance products as the leader in the industry.
Discovery Life
- Discovery Life was launched in 2000 and is South Africa’s fastest growing major life assurer in the risk market, having captured 25% of the overall risk broker market.
- It was the first South African insurer to separate risk from investment, leading significant change in the industry.
- With 364 887 individual policies, the embedded value of its business is now more than R17 billion including Discovery Invest.
- Discovery Life addresses the problem of underinsurance through its unique integrated operating model and through innovative product development.
- Discovery Life was voted the top life assurer in the Sunday Times Top Brands survey for both 2010 and 2011.
- Discovery Life was voted the top risk and life assurance supplier at the 2010 Financial Intermediaries’ Association of Southern Africa (FIA) Awards and the top long-term insurer: recurring savings at the 2011 and 2012 FIA Awards.
- In 2012, the PricewaterhouseCoopers fifth biennial Strategic and Emerging Issues in South African Insurance survey rated Discovery Life’s life products as the leader in the industry.
Discovery Invest
- Discovery Invest was launched in 2007 and declared its maiden profit in 2010.
- Discovery Invest combines the breadth and skill of the asset management industry with the existing research and development capabilities of Discovery Life.
- The company offers consumers a unique and comprehensive product range that addresses the current gaps in the market by offering greater protection against poor investment choices.
- With 74 327 policies, Discovery Invest now has more than R26.6 billion in assets under management.
- Through Discovery Invest’s LISP platform, clients have access to over 329 local and 65 offshore investment funds.
- Discovery Invest is now the largest writer of endowment policies in South Africa with a 21% market share.
- In 2011, Discovery Invest received the Financial Intermediaries Association of Southern Africa (FIA) award for best recurring premium business.
Discovery Insure
-
Discovery Insure was launched in May 2011 and now has 27 973 policyholders.
-
This pioneering product was created by leveraging the behavioural
expertise developed in the Vitality programme with the latest telematics
technology.
-
The unique Vitalitydrive programme encourages and rewards better driving
behaviour and ensuring that vehicles are roadworthy.
-
At the heart of Vitalitydrive is the DQ-Track telematics device that
measures and reports crucial aspects of driving behaviour.
-
Vitalitydrive provides up to 50% fuel rewards on clients’ monthly BP fuel
spend.
-
Young adults between 18 and 25 can receive further discounts of up to 25%
on their motor premiums.
- Discovery Insure offers comprehensive vehicle, personal and household cover.
-
Launched in October 1997, Vitality
is Discovery’s science-based wellness programme that underpins each of the
Discovery businesses and is an international brand in its own right.
-
It is the largest programme of its
kind in the world, with a global membership base of over five million.
-
Vitality encourages healthy
behaviours that reduce long-term healthcare costs by rewarding members for
improving their health.
-
There are now more than 1.6
million Vitality members in South Africa.
-
Vitality is accredited by the
Sports Science Institute of South Africa.
-
The Vitality value offering is enhanced by the DiscoveryCard, Discovery’s
unique Visa credit card which gives members real cash back.
-
Launched in October 2004, the DiscoveryCard is South Africa’s largest
non-bank new generation credit card in issue, with an 8.9% share of
point-of-sales spend. There are now 231 302 primary cardholders.
-
The
HealthyLiving benefit offers Vitality members up to 25% cash back on
HealthyCare products at Clicks, HealthyGear at adidas and TotalSports stores,
and HealthyFood items at Pick n Pay.
-
Vitality
now has the ability to integrate into over 100 fitness tracking technologies.
International
operations
United Kingdom
In the UK, Discovery has a 75% shareholding in a joint venture with Prudential plc. Through PruHealth and PruProtect, the company offers healthcare cover and protection products.
PruHealth
- Launched in April 2004, PruHealth is the fourth largest Private Medical Insurer in the UK and the only one that rewards people for leading a healthy lifestyle.
- PruHealth now covers 548 970 lives.
- It offers consumer-directed products linked to the Vitality wellness programme.
- In 2010, Discovery acquired Standard Life Healthcare, thereby leveraging the significant assets of both companies and resulting in greater scale for PruHealth.
- PruHealth has won several awards for its product innovations.
PruProtect
-
PruProtect, which was launched in
September 2007, markets consumer-engaged life assurance products in the UK
market.
-
The company’s products integrate
with those of PruHealth and Vitality to unlock added value and significant
premium savings for clients.
-
The company has become a major player
in the UK protection market. With 136 164 policies in force, it now covers 163
566 lives.
-
PruProtect has received industry
recognition, including awards in four categories at the 2011 Defacto Awards.
The company was also named Best Individual Protection Provider in 2011 by
Professional Adviser, and walked off with the Innovation Award at the 2011
Protection Review.
United States
The Vitality Group
-
The
Vitality Group was launched in 2007 and offers a stand-alone version of the
Vitality programme to self-insured, large employer groups and to healthcare
carriers.
-
Discovery holds a 75% share in
The Vitality Group, 25% being held by Humana Inc.
-
The Vitality Group now covers
293 674 lives.
-
The Vitality Group has entered
into a partnership with Wellness and Prevention, a subsidiary of
Johnson&Johnson, the world’s premier consumer health company.
-
The Vitality Group recently announced
a partnership with ADP, one of the world’s largest providers of payroll and
employee benefits administration solutions.
-
In
2011, the group was awarded the C Everett Koop National Health Award for its
work with Alcon Laboratories, a highly prestigious award recognising
outstanding workplace health improvement programmes.
HumanaVitality
-
Launched
in February 2011, HumanaVitality is a joint venture between Humana Inc and Discovery
(through The Vitality Group) that makes Vitality available to Humana clients
with commercial medical plans.
-
Discovery holds a 25% share in
HumanaVitality.
-
Humana
is the third largest US insurer,
based on revenue. Humana has approximately 11.8 million medical members and 7.7 million specialty members.
-
HumanaVitality
now has more than 1.5 million Vitality members.
China
Ping An Health
-
Ping An Health was launched in China in 2009, after Discovery acquired a
20% share in Ping An Health Insurance Co of China Ltd, a wholly-owned
subsidiary of Ping An Insurance (Group) Company of China.
-
Ping An Insurance is China’s leading insurer and the second largest
insurer in the world.
-
The joint venture will see Discovery’s product innovation and
consumer-engaged model exported to a potential market of 83 million families.
-
Vitality was launched in China through Ping An Health in June 2012.
AIA Vitality
-
AIA Vitality was launched in Singapore in July 2013, after a strategic
joint venture between AIA Group Limited and Discovery Limited that aims to
introduce Discovery’s successful wellness-based life insurance model to the
Asia-Pacific region.
-
AIA Group Limited and its subsidiaries comprise the largest independent
publicly listed pan-Asian life insurance group and holds leading positions
across the majority of its markets. It has operations in 17 markets in
Asia-Pacific and has operated in Singapore for more than 80 years.
-
AIA serves the holders of more than 25 million individual policies and
over 13 million participating members of group insurance schemes.
-
The investment to be made in AIA Vitality by Discovery is expected to
fall within Discovery’s strategic framework of less than 5% of pre-tax profits
for new business development.
