MPs want IPEC to regulate NSSA, Medical Aid Societies

MPs want IPEC to regulate NSSA, Medical Aid Societies

Dzivarasekwa legislator Edwin Mushoriwa has asked Finance Minister Mthuli Ncube to consider giving the Insurance and Pensions Commission (IPEC) powers to regulate NSSA and medical aid societies.

Currently IPEC only regulates players in the insurance sector and is not empowered to oversee the operations of NSSA.

However, making his contribution to Clause 4 during Committee Stage of the Insurance and Pensions Amendment Bill Honourable Mushoriwa revealed that he is of the view that NSSA cannot be left without a regulator as it receives people’s pensions.

Below is the full text of Honourable Mushoriwa and those of other legislators:

HON. MUSHORIWA: I listened to the Hon Minister yesterday when he was closing the Second Reading of the Bill. He then said NSSA and the medical societies were not included in this Bill. His reason was that IPEC does not have the capacity to supervise NSSA and the medical societies. I am going to propose and suggest that we need to make sure that Clause 4 (1) (a) in the principal Act should and must be amended to include NSSA and medical aid societies under the organisations that are regulated by IPEC.

This is the platform that we have. We have to empower IPEC. We have to capacitate IPEC. Let us give IPEC as much power as possible. It is wrong in my view, for the Hon Minister to say IPEC does not have the capacity and yet he thinks that the Minister of Public Service and Social Welfare has no capacity than IPEC or to say that the Ministry of Health has more capacity than IPEC. That is not good. What we want to do is just like what Hon Biti was saying, if you look at RBZ, there is no banking institution that can do what it wants including state banks like ZB. If you look at all the banks where the Government has got the majority shareholding, they are all answerable to RBZ. That is what we want under this.

          Secondly, (g) where it says “to accredit actuaries, auditors, asset managers, credit rating agencies and other service providers” should be deleted from the Bill because the auditors are accredited under the PAAB, and the asset managers are also accredited there and it says, other service providers. What are other service providers? Does that include cleaners and fast food outlets? What does it mean? The best thing is to make sure that we delete that whole clause (g) where it says “to accredit asset managers, credit rating agencies and other service providers”. Those are my two remarks. Let us include NSSA and medical aid societies and remove (g). I thank you.

HON. BITI: The biggest insurance house in Zimbabwe is NSSA. NSSA is a cash cow. It receives contributions which are 3% for every worker that an employee and employer make. They employ inspectors. They visit our businesses and enterprises to ensure that we are paying. It receives a minimum of US$40 million a month and I do not know now with RTGS. It used to receive US$40 million a month yet it is not regulated. Surely that is critical. Three years ago in 2017, there was a Commission of Inquiry into NSSA that was conducted by Accountants Kudenga.  That Audit Report was submitted to the Public Accounts Committee.  It showed massive and rampant corruption at NSSA, some of which resulted in the ongoing prosecution of the Minister who was responsible for NSSA at the time.  I shall mention her name.  So, to leave this humongous, monolithic known as NSSA to go unregulated Hon. Chair, we will not be doing our job as elected Members of Parliament.  NSSA must be regulated and de-regulated by IPEC.  If the fear of the Minister is that IPEC does not have the capacity, let us give them the capacity now.  If it is a staffing issue, let us deal with it now.  If it is a funding issue, let us deal with the issue now.  If it is a limitation on their committees and sub-committees, let us deal with that now.  We can create a sub-committee dealing with NSSA on its own in the Bill. 

Hon. Chairperson, everyone is audited and supervised. Everyone has got a regulator.  Why should NSSA be a black swan?  What is so special about NSSA, particularly Hon. Speaker, when it is paying injured workers, and retired workers 60 RTGs?  If you live in Chiendambuya as I do, you have to wait for five months, to wait for a little contribution from NSSA to accumulate before you can board a bus to Headlands to come to Harare yet they are buying buildings.  They have become the second-largest investor on the Zimbabwe Stock Exchange, second only to the Old Mutual.  They own hotels, banks, palaces, and vehicles.  We cannot do that Hon. Chairperson.  We have to include NSSA amongst the institutions that are regulated by our regulator, IPEC.  Ministers cannot regulate.  If that was the argument then the Minister of Finance will be regulating banks but he cannot do that.  His own job needs 36 hours, so he cannot regulate.  The Minister of Labour has got other things, he is feeding people there.  He is in Gokwe and Chiendambuya feeding people because one of his mandates is social welfare, so he cannot regulate this monolithic.  Let the experts at IPEC regulate it.  I know that this is a political hot potato.  This is not about politics.  This is not about the territorial interests of Ministers because certain Ministers do not want their territory to be touched.  It is not about that.  It is about best practices and what is in the national interest of Zimbabwe.  What is in the national interest of Zimbabwe is that every public body must have its armpits opened and examined and there is nothing special about NSSA.  NSSA should be included as one of the bodies that IPEC has regulatory powers.

I come to the medical aid societies.  A few years ago, we had a huge scandal at the Public Service Medical Aid Society (PSMAS).  The Chief Executive was earning US$250.000 per month.  The President does not earn that, not even David Beckham earns that.  A basic director was earning US$60.000.  Board members were being given US$50.000 to US$60.000 yet medical claims were not being met by doctors and hospitals.  They were not accepting the PSMAS card.  Here as Hon. Members of Parliament, we are members of PSMAS and we are members of a scheme called Pinnacle.  No doctor in Zimbabwe would accept that card yet PSMAS should be the largest medical aid society in Zimbabwe by virtue of the fact that it covers all civil servants.  It should be bigger than CIMAS but due to the mismanagement and abuse of funds, it is a late call.  We submit Hon. Chair that medical aid societies should also be regulated by IPEC. 

We can listen to an argument by the Minister or anyone that says let us create a separate regulator for them but to say they should just be let free, we as Members of Parliament would have been failing in our duties.  One of our core responsibilities is that of supervision.  Read Sections 114, 117, and 119. Let us protect ordinary persons, let us protect the citizens because they have been abused by these insurance companies, medical aid societies, and so forth. 

My own mother Hon. Chairperson is a member of CIMAS.  She has diabetes, and TB and she is now officially on my salary but she pays a lot of money to CIMAS.  That is not good enough.  I submit that we need to protect our people by making sure that these people are regulated.  Thank you very much. 

^(v) HON. TOGAREPI:  I also want to come in on the issue of regulation, for example, of the medical aid societies.  One experience that I had was to see an insurance company that is running a health insurance.  After being strictly regulated by IPEC, they would migrate to medical aid societies where they are not regulated.  Where they are coming from, they have already stolen people’s monies and can now move to another line of business which does the same thing.  Now because there is that freedom in that sector where people have not enough confidence to supervise the credential soundness of those companies, they will just move to medical aid societies and run away from IPEC.  IPEC has got actuaries. 

The major expertise that is needed in insurance is actuarial science and IPEC has got those competencies.  There could be other reasons.  If there are areas where medical aid would need doctors, association of doctors, the Ministry or anybody, those areas can remain regulated by those people.  However, the credential part or the soundness part which will then cause problems when a medical aid society fails to meet its obligations must be regulated by a competent institution that can deal with credential issues. 

I strongly support what the other colleague was saying.  If IPEC would not be the best in the view of the Minister, why not establish another regulator who can deal with issues of credential supervision on the medical societies and NSSA.  It is very critical that we also understand that these financial institutions, we can talk of them, medical aid societies, NSSA, et cetera are financial institutions with a lot of financial muscle that can cause distortions in the financial systems.  I think the Minister as a guru in that area would know better.  A big institution with a lot of money can dictate what happens in the insurance industry.  Is it to our interest that whatever NSSA does ends up destroying the insurance industry that has financed and strengthened our infrastructural development? Is it good for us? Is it not good for us to come up with regulation, strong regulation, financial regulation.

That is where our issue is.  I think in the NSSA Act, there is a section that says the Ministry will have a say on all financial issues related to NSSA.  Why not give only that part to IPEC where it will then help the Minister because IPEC operates on behalf of the Minister.  So if the Minister is doing that already, if that section is given to the actuaries running under IPEC, will it not give us more benefit in protecting the interests of policy holders who are contributing to NSSA?

The other issue is related to IPEC being given authority to accredit other professionals.  I heard my other colleague saying it will be like IPEC invading other areas where there are already experts or established boards.  The issue there is, if IPEC has no power to accredit actuaries for example, or auditors, we have had a lot of poorly done audit reports about insurance companies.  If they had so presented good audit reports, we would not see failure in the insurance industry before IPEC Act because IPEC relies on these experts bringing correct reports. Correct image of these insurance or pension funds.

          So it should be given to IPEC if an audit company fails to perform to the expectations of IPEC as a regulator because it relies on their reports.  IPEC should have the authority to say you are not allowed or your reports would not be admitted or admissible to IPEC in making a decision on the soundness of the insurance company.  It is not like the IPEC would be an audit regulator but it should be given the right to protect the policy holders where they get a service from an institution that is either not competent or reckless or fraudulent in the report. IPEC should be able to say you are not allowed to audit insurance companies.  Only in as far as that, it is critical for the protection of policy holders.  I thank you.

          HON. MARKHAM: Thank you Mr. Speaker.  I just want to buttress debate on this issue.  NSSA contributions are mandatory.  That means every single civil servant has money deducted, there is no choice, in fact every worker.  So the issue is, for the past 20 years, NSSA has nothing to show to 20 years of contributors.  Every pensioner for 20 years, is now getting nothing but NSSA has buildings and some rich ex-employees.  The issue with the Bill is to regulate everybody.  You cannot give NSSA a green card to do what they want when they have that record.  It is not right for 20 years of pensioners to have nothing and anyone who excludes them from this Bill is telling the future pensioners that the money that they are contributing for a pension in the current regime will not work and they will not get anything back from it.  It is like a tax, it is not a benefit.

          The same as medical societies; we had major issues on medical societies.  You pay medical societies, we here being in Parliament, I got 6% of the payment.  If you look at the local authorities, some local authorities, I will talk about the one I know.  The urban local authority here is deducting workers’ contributions and not paying the medical aid society.  This has to be regulated under the same regulations for everybody because if you start talking of competitive advantage, how can you give a competitive advantage to NSSA when there is no regulation?  They can do what they want because that is what has been happening.

          So to say that they are excluded, it cannot happen.  The Auditor General, in our deliberations as a Committee, put on the screen the points and the only one taken up by the Cabinet was the one that NSSA must be regulated.  So my question is, the Cabinet – as this House does represent the workers and the people of Zimbabwe, do not want the public service pensioners, main pension regulators to regulate them, why?  There is no sense because you cannot say to me that IPEC is incapacitated because even in the incapacitation, I am sure and comfortable that they can do a much better job than what is being done for the past 20 years.  Being established and providing the Bill as accepted and done in a good fashion, we can call them to order.  We cannot say that they must continue in the current vein when basics like conflicts of interest exist in the current board.  We cannot say if they cannot do simple good governance, they have hundreds of cases against them from abuse of office to defunct overcast projects to questionable fake answers. How can you let them continue like that and say now they can stand alone?  Thank you.

          HON. DR. MURIRE: Thank you Hon. Speaker. I have been listening to the argument but my question is, we have got IPEC which covers insurance and pension.  I believe it should also be very explicit in terms of the regulation, what needs to be regulated here in insurance and pensions. We need to have a clear understanding of the difference between the two so that the regulations applied become effective.

          In terms of insurance, it is governed as a business. In any business, there is an amount of money and in this case it is a business providing insurance and it includes the public service. NSSA was created by Government together with labour.  I remember the negotiations that took place when NSSA was promulgated, it involved Labour and Government.  Even the composition of the board was made of Labour and Government.  If I recall, initially in the board, the late Hon. Tsvangirai was a member.  He was very vocal on NSSA having to benefit workers and focus was on people employed in the private sector.  As they move forward, it also encompassed Government employees.  Now, what benefit is NSSA bringing to the workers?  You will see that we have various pension schemes, local Government Pension Scheme, National Railways Pension Scheme, Postal and Courier Services Pension Scheme and NSSA comes in to fill in the gap but if we see today, people are actually involved in these various pension funds that they get from NSSA. What relevance is it offering? So I am saying, the law that we are intending to make should actually rectify this so that NSSA becomes relevant to the needs of the workers.  If not, then it is not business.  We talk about insurance being business like CIMAS, they are in business, it is not a public service but NSSA is not a business, it is a public service.  PSMAS as well, initially it was a Government initiative to benefit Government workers and not a business but if you look at the activities that all these organisations are engaging in, they have ceased to be entities that should offer public service, they are now entities that are there to make profit, with individuals with specific personal interests and not workers.  We must ensure that the regulation is so designed to benefit the workers when they retire. Then we can have the other section which deals with business so that a person can go there and invest his salary with the intention of getting extra benefits knowing very well that they are investing in an entity that is in business to make profit on their behalf like buying stock. It will be different from buying stock from the Stock Market so that you can get value.  They are taking this as business, the idea is to take care of people when they are in hard times.  So let us look at public service insurance being regulated for us offering public service for the benefit of our people.    

HON. NDUNA: Thank you Hon. Chairperson. I just want to stand on the same pedestal and platform that Hon. Mushoriwa spoke to and about and stood on, the issue of inadequacies in IPEC. There is need to have a separate entity, in particular that is going to regulate the health insurance industry.  It is with a heavy heart and I keep mentioning issues to do with road accidents.  In road accidents, I lost two children – no compensation from the medical aid society, no compensation from the road accident fund, third party and on full cover.  I did not get anything. 

Mr. Speaker Sir, 43 people are getting injured each day, 5 people are dying each day due to road traffic accidents and some die later due to the road accident injuries incurred in a road traffic accident with no compensation from the health insurance industry and also from the Vehicle Insurance Industry.

If there are inadequacies in the current set up, I ask that – because 15% of our people are living with disability and most of them because of road traffic accidents.  It means every 30 minutes somebody gets injured.  We as Parliamentarians are prone to that, we are able to become disabled in the next 30 minutes because you are using an automobile.  My clarion call which I would have deferred but I am going to debate now is 70% of our people are dying because they have gone to a definitive place or a health care institution because they have no health care cover.  Seventy percent of our people die because they have not been stabilised within the next hour after the accident and that takes money and a copious amount of blood infusion.  That is enshrined and a preserve of the healthcare insurance scheme.  How they have turned it from provision to a scheme of self benefit for canning what they get and getting what they can and moving off boggles the mind. 

They have turned themselves into some business cartel as opposed to service providers.  What happened to me should not happen to anyone again especially the opportunity to stand here and make a clarion call to have a change for the better. Let us make sure that as I have done in Chegutu West constituency, I have established an Accident Victim Stabilisation Centre which is too metres from the highway, Bulawayo/Harare 200 metres from the Surisuri turnoff that is about 110 kilometers from here.  I intend to establish one in each and every town, an accident victim friendly stabilisation centre so they are one hour apart and they are less than an hour from the highway so that somebody can be stabilised.  There is need to actually promote and couple that and make sure there is financial backing from the health insurance.  How many times do you go to hospital after paying your contributions to PASMAS, maybe never but the only one time you need medical insurance, you will not get it because it is inside protected by a cartel who we call healthcare funders but they do not do that.  It is my thinking that if there is a dearth in terms of capacity at IPEC, let us have regulators and enforcers of the law separate. 

You can do another Bill because in my law school, it says if you have risen to think that there are deficiencies in the law and it does not protect the interest that you speak to and about, then change the law.  You can change the law, propose another set of rules which is a Bill, let it come here and we debate.  His Excellency will assent to the Bill and it becomes an Act of Parliament. I cannot over-emphasise the issue of health care insurance.  It touches across the divide. Previously when I debated, I touched on the figures but they can be way much more than that. The amount that has gotten in third party insurance and passenger insurance, I remember because of the deficiencies of observation and regulation, when they appeared before a Committee that I chaired in the Eighth Parliament, the passenger service vehicles, 60 thousand of them were not insured, meaning that the innocent unsuspecting citizens who are seated in a bus to Dotito are not insured by both the healthcare insurance and also by the passenger insurance, so there could not be any issues to do with compensation in the unlikely event that there is an accident. A breadwinner can be lost in the unlikely event that there is a bereaved in that accident like we have seen in a plethora of accidents that have occurred recently.  The Government, through the Minister has had to come in through the Minister of Public Service to give 50 kg of mealie meal, a coffin and most of the times there is also maybe Nyaradzo and other service providers who would have said the monies that you were paying for your insurance plan are now equal to half the coffin you paid for.  There is a lot of delinquent behaviour occurring in the insurance sector.

          Therefore, I ask that if there are deficiencies, let there be a stand-alone and also in that board of directors, there is need to be somebody who has first hand information, somebody who was born able-bodied who is now disabled because of RTA, who is now disabled because they have not had CIMAS and PSMAS pay for their ailment which in this case is sugar diabetes.  I have Cde Wunganayi who has no legs, both his legs are amputated but I was in the military for 10 years, he was my instructor, second to none, he was trained in North Korea trained to fight imperialism single-handedly but the man is amputated. He is in a wheelchair because of sugar diabetes and because PSMAS or CIMAS could not pay care insurance for him to continue to have his legs.  There is need to regulate, monitor and evaluate the operations of these health care insurance sectors, in particular the health insurance sector.       

          NSSA cannot continue to exist in the manner that it does, if it pleases you ‘Gold Finger’, I know it does.  When it comes to the issues of upholding the Constitution, your heart is on the right side. 

          HON. MKARAKATIGWA: Thank you.  Listening to Hon. Members’ presentations, I cannot help but concur with their emphasis on the need to either strengthen or capacitate IPEC as the current regulator that we have, or alternatively seriously engage in considerations to come up with another regulatory board which is going to be effective.

 I am not going to repeat what they have contributed but what I want to do is to give my reason.  It is just one reason and it is all clear for all to see.  We are in the Ninth Parliament; we have a current Government, the new dispensation but the challenges that Hon. Members spoke to, for example Hon. Biti when he mentioned the scandals to do with medical aid is not the responsibility of the Ninth Parliament nor the new dispensation, it is a legacy issue.  Let us agree to call it a legacy issue but what does that do the present and the future?  It is responsible for the lack of confidence. 

Market confidence is now lacking, every effort that you are doing, and every effort that everyone is engaged in is a zero sum game because market confidence has been lost due to reasons that have been spoken to by other Hon. Members.  So I am calling upon you to take this seriously because creation of a system that is going to regulate, a system that is going to be accountable will make life easier, it will restore that lost confidence, it will make sure that what you are doing can be supported by the citizens even those that are chasing capital, the business people, they will support it when they have got that confidence.

Coupled with the issue of confidence Hon. Speaker Sir, is probably a correlation between the activities of the pension funds and the absence or seeming absence of the heavy hand of the regulatory authority in that necessary protection and how they relate to the judicial management.  Many a time when there is failure, liquidation   kicks in, there is judicial management, there may be corporate rescue practitioners put in place but these have become a haven of corruption because there is no effective rescue that results at the end of the day.  What comes out is striping of assets. When insurance is still healthy like I said, they hedge their buildings, properties, assets but when judicial manager kicks in, those assets vanish, those assets are stripped.  This can only be stopped by a very strong regulatory board and this will lead to restoration of market confidence. I thought I should emphasize on market confidence. 

^(v)HON. TOGAREPI: Thank you Hon. Chair. The previous speaker has emptied all I wanted to say and I think the Minister has heard the concerns of the Hon. Members that any financial institution dealing with public funds is allowed to go freely without regulation.  There are likely to be infringements on the reasonable expectations of those who contribute to that institution. 

So, as for NSSA, now that issues have been raised, I think the Minister will call upon your expertise, your knowledge to ensure that NSSA is regulated either directly under your Ministry and a new regulator is put in place to deal with NSSA issues.

Looking at what has been given to IPEC at the moment, I think IPEC is going to come out of this Act stronger and able to regulate the private insurances companies and pension funds. So, our call Hon. Minister is that let us have regulation for every person who deals with public finances, people’s monies are important, they may be life time investments and if they are then lost people get worried.  So for NSSA, I think what the Minister has already presented to us in terms of this Bill, let us leave NSSA get another regulator and the medical aid societies, especially medical aid societies are purely insurance in nature in everything they do.  I do not know why they feel being regulated by IPEC would affect their operations.  However, it is critical Hon. Chairperson, that we encourage the Minister after this Bill has gone through that he comes up with another Bill to deal with NSSA so that it can give comfort to the people of Zimbabwe who look up to NSSA to protect their future especially in terms of social security.

          THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. PROF. M. NCUBE):  Hon. Chairman, I have noted the robust contributions from several Hon. Members of this august House on this issue of the regulation of NSSA and medical aid societies by IPEC.  Naturally, this is a major amendment.  I propose to move that we report progress and seek leave to sit again.  I thank you.

MPs want IPEC to regulate NSSA, Medical Aid Societies