Acts Online
GT Shield

Medical Schemes Act, 1998 (Act No. 131 of 1998)

Chapter 4 : Medical Schemes

20. Business of Medical Scheme


(1) No person shall carry on the business of a medical scheme unless that person is registered as a medical scheme under section 24.


(2) No medical scheme shall purchase any insurance policy in respect of any relevant health service other than to reinsure a liability in terms of section 26(1)(b).


(3) Where a medical scheme intends entering into any reinsurance contract, or effecting any amendment of such reinsurance contract, the board of trustees shall furnish to the Registrar —
(a) a copy of any such reinsurance contract or amendment of such reinsurance contract; and
(b) an evaluation of the need for the proposed reinsurance contract undertaken by a person with the necessary expertise to conduct such an evaluation, and who has no direct or indirect financial interest in the relevant reinsurance contract.


(4) The Registrar may in writing raise, within 30 days of having received any such reinsurance contract or amendment and evaluation, (my matter in respect of the terms of such contract or amendment, taking into account whether —
(a) due consideration has been given by the medical scheme concerned to the need for reinsurance, based upon an assessment of the: financial risks to which that medical scheme is exposed;
(b) the reinsurance contract is in the best interests of the members of the medical scheme concerned; and
(c) there is conflict of interests between the parties to the reinsurance contract.


(5) The board of trustees is obliged to address, to the satisfaction of the Registrar, any matter raised prior to the implementation of the reinsurance contract or amendment to any such contract;


(6) The board of trustees shall certify that a reinsurance contract or amendment submitted in terms of section 20(3) constitutes the entire agreement between the medical scheme and reinsurer with respect to the business being reinsured thereunder, and that there are no arrangements between the medical scheme and the reinsurer other than those expressed in the contract or amendment.


(7) Failure to comply with sections 20(3), 20(5) and 20(6) shall result in such reinsurance contract or amendment being null and void.