It is encouraging to see that the GTC Medical Aid Survey recognises that a scheme’s solvency ratio should not be regarded as the near sole indicator of financial stability and long-term longevity with a weighting of 15% allocated to this particular factor. Agility has historically argued that various alternative models can be considered and has enjoyed extensive media coverage in this regard, including:
- Moneyweb: Medical savings ruling opens industry debate
- Fin24: Your medical scheme’s reserves could be costing you money
- Business Day: Rethink medical funds’ solvency of 25%
Important to also keep in mind, and as described in detail in a previous Agility Advisors broker news-blast, the recent Constitutional Court ruling now allows funds contained in a scheme’s Medical Savings Accounts (MSAs) to be factored into the solvency ratio equation. This means that all medical schemes with savings-based options will see immediately improved financial positions as MSAs are now considered assets and can be factored into the calculation of schemes’ solvency ratios.
Furthermore, Agility’s technology and risk management principles have seen one of our client schemes experience a significant financial recovery with solvency levels rising from a low of 6% (as a result of significant organic growth in one year) to a projected 16% for YE:2017.