Namfisa: ‘Help consumers now’
The relief measures for clients of long- and short-term insurers, as well as medical aid funds can only be claimed by those directly affected by Covid-19.
Jo-Maré Duddy – The regulator of non-bank financial institutions in Namibia has called on the insurance and medical aid industries for “immediate relief” to consumers in light of the Covid-19 state of emergency in the country.
Relief measures required by the Namibia Financial Institutions Supervisory Authority (Namfisa) include premium holidays from long-term and life insurance companies, extensions of policies from short-term insurance companies and contributions holidays from medical aid funds.
The chief executive officer of Namfisa, Kenneth Matomola, on Tuesday said the regulator expects a “severe impact” of Covid-19 on non-bank financial institutions (NBFIs).
Namfisa foresees reduced or no new business during the lockdown period, adverse impact from the dwindling financial markets and rising claims. The brunt will vary depending on the industry, Matomola said.
‘Adequate buffers’
NBFIs, however, remain financially sound with adequate capital buffers to absorb adverse shocks, he added.
According to the latest Namfisa figures, the five open medical aid funds in the country had reserves totalling N$1.34 billion at the end of 2019, while the four closed funds had N$270 million.
The total capital and reserves of the long-term insurance industry at the end of June 2019 was about N$9.5 billion, while the figure for the short-term insurance industry was nearly N$2.2 billion.
Namfisa requires NBFIs “to offer immediate relief to the consumers based on varying business models and product features, but without compromising the financial soundness of the institutions”, Matomola said on Tuesday.
Only clients that are directly affected by Covid-19 will be helped, he pointed out.
Insurance
Long-term or life insurance providers must allow premium holiday relief with the possibility for extension should the state of emergency is prolonged.
Clients must ensure that clients are 100% covered during the period determined by the insurers, Matomola said.
In the event that a claim occurs during or after the period the outstanding premiums should be deducted from the claim amount.
If requested by clients, insurers must allow for premium holidays on saving, investment and retirement annuity policies, he said. These policies should therefore be treated as paid-up policies.
These policies can be reinstated after a period determined by the insurer has passed - however, “without imposing penalties or costs for clients for the ‘missed’ premiums and without clients having to pay in the premiums missed”.
Matomola said clients should be informed that when choosing this option they forfeit investment returns on the portion of the “missed” premiums for the period.
Short-term insurers should consider extensions when policies are deemed to have lapsed for the duration of the state of emergency.
Medical aid
Matomola said medical aid funds should allow for contribution holidays in conjunction with the apportionment of benefits.
Members must be allowed to downgrade benefit options during the course of the year although ordinarily they are only permitted to change options at the beginning of the year.
“This will enable the affected members to downgrade to more affordable benefit options,” he said.
“Contribution and benefit freezing for members in sectors that are severely impacted, such as tourism amongst others, to be treated as continuing members after a reasonable period has lapsed” once the state of emergency is lifted.
Medical aid funds should provide ex-gratia allowance/benefits to all Covid-19 related claims where a member’s benefits relating to laboratory tests, consultations and hospitalisation or any other coronavirus related treatment is or will be depleted, Matomola said.
Relief measures required by the Namibia Financial Institutions Supervisory Authority (Namfisa) include premium holidays from long-term and life insurance companies, extensions of policies from short-term insurance companies and contributions holidays from medical aid funds.
The chief executive officer of Namfisa, Kenneth Matomola, on Tuesday said the regulator expects a “severe impact” of Covid-19 on non-bank financial institutions (NBFIs).
Namfisa foresees reduced or no new business during the lockdown period, adverse impact from the dwindling financial markets and rising claims. The brunt will vary depending on the industry, Matomola said.
‘Adequate buffers’
NBFIs, however, remain financially sound with adequate capital buffers to absorb adverse shocks, he added.
According to the latest Namfisa figures, the five open medical aid funds in the country had reserves totalling N$1.34 billion at the end of 2019, while the four closed funds had N$270 million.
The total capital and reserves of the long-term insurance industry at the end of June 2019 was about N$9.5 billion, while the figure for the short-term insurance industry was nearly N$2.2 billion.
Namfisa requires NBFIs “to offer immediate relief to the consumers based on varying business models and product features, but without compromising the financial soundness of the institutions”, Matomola said on Tuesday.
Only clients that are directly affected by Covid-19 will be helped, he pointed out.
Insurance
Long-term or life insurance providers must allow premium holiday relief with the possibility for extension should the state of emergency is prolonged.
Clients must ensure that clients are 100% covered during the period determined by the insurers, Matomola said.
In the event that a claim occurs during or after the period the outstanding premiums should be deducted from the claim amount.
If requested by clients, insurers must allow for premium holidays on saving, investment and retirement annuity policies, he said. These policies should therefore be treated as paid-up policies.
These policies can be reinstated after a period determined by the insurer has passed - however, “without imposing penalties or costs for clients for the ‘missed’ premiums and without clients having to pay in the premiums missed”.
Matomola said clients should be informed that when choosing this option they forfeit investment returns on the portion of the “missed” premiums for the period.
Short-term insurers should consider extensions when policies are deemed to have lapsed for the duration of the state of emergency.
Medical aid
Matomola said medical aid funds should allow for contribution holidays in conjunction with the apportionment of benefits.
Members must be allowed to downgrade benefit options during the course of the year although ordinarily they are only permitted to change options at the beginning of the year.
“This will enable the affected members to downgrade to more affordable benefit options,” he said.
“Contribution and benefit freezing for members in sectors that are severely impacted, such as tourism amongst others, to be treated as continuing members after a reasonable period has lapsed” once the state of emergency is lifted.
Medical aid funds should provide ex-gratia allowance/benefits to all Covid-19 related claims where a member’s benefits relating to laboratory tests, consultations and hospitalisation or any other coronavirus related treatment is or will be depleted, Matomola said.
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