1. Presentation to PORTFOLIO COMMITTEE ON HEALTH Gary Taylor MD: Group Services Division Gary Taylor MD: Group Services Division

2. Objectives of Bill Laudable principles Beware of mixed messages e.g. Empower Trustees to act independently vs transfer powers from trustees to Council Laudable principles Beware of mixed messages e.g. Empower Trustees to act independently vs transfer powers from trustees to Council

3. Examples of Mixed Messages : Trustees Independence –Independent from auditor –No administrator or broker influence in governance Independence –Independent from auditor –No administrator or broker influence in governance Disempowerment –Approve reinsurance –Determine waiting periods –Cannot have their choice of trustee of Principal Officer –Conditional selling Disempowerment –Approve reinsurance –Determine waiting periods –Cannot have their choice of trustee of Principal Officer –Conditional selling

4. Clause 5 : Reisurance Contracts Is it necessary to require each scheme to incur additional costs of an independent evaluation when: –There is only limited abuse? –The Registrar already has the power to act? –Trustees should be empowered and held responsible? Is it necessary to require each scheme to incur additional costs of an independent evaluation when: –There is only limited abuse? –The Registrar already has the power to act? –Trustees should be empowered and held responsible?

5. Clause 6 : Conditional Selling This new clause has not been raised before as a problem needing rectification Could this not prevent Unions from developing and marketing a scheme which is conditional upon members paying union dues? Intention? If intended to deter indirect discrimination, the power to act already exists This new clause has not been raised before as a problem needing rectification Could this not prevent Unions from developing and marketing a scheme which is conditional upon members paying union dues? Intention? If intended to deter indirect discrimination, the power to act already exists

6. Clause 9 : Waiting Periods Removal of the current guidelines and substitution of the current “taking into account” clause: –creates uncertainty prior to regulation –inappropriate drafting of legislation We propose retaining the existing Act’s wording Removal of the current guidelines and substitution of the current “taking into account” clause: –creates uncertainty prior to regulation –inappropriate drafting of legislation We propose retaining the existing Act’s wording

7. Clause 22 : Eligibility : Trustees or Principal Officers Intention = sound governance Assumption : independence = quality decisions (flawed) Act specifies “fit & proper” which should not preclude those who might have legally required expertise, but also some bias Intention = sound governance Assumption : independence = quality decisions (flawed) Act specifies “fit & proper” which should not preclude those who might have legally required expertise, but also some bias

8. Clause 22 : Eligibility : Trustees or Principal Officers King Report I and II foresee a mix of executive and non- executive, with: –majority executive –non-executives chosen for skill (not constituency) Pension Fund Act allows: –50% appointed trustees –non “independent” Principal Officer King Report I and II foresee a mix of executive and non- executive, with: –majority executive –non-executives chosen for skill (not constituency) Pension Fund Act allows: –50% appointed trustees –non “independent” Principal Officer

9. Clause 22 : Eligibility : Trustees or Principal Officers Draft bill is now inconsistent, as a trustee or Principal Officer can still be: –an employee of a managed care company –a provider of service –the CEO of a hospital group –an In-house administrator –an Employee of a “consultancy” i.e. Who in this industry is truly dependent? Draft bill is now inconsistent, as a trustee or Principal Officer can still be: –an employee of a managed care company –a provider of service –the CEO of a hospital group –an In-house administrator –an Employee of a “consultancy” i.e. Who in this industry is truly dependent?

10. Clause 22 : Eligibility : Trustees or Principal Officers Practical issues i.e. “independent” Principal Officer –additional costs to scheme (infrastructure) –introduces a new vested interest stakeholder –accessibility of offsite Principal Officer –accreditation of the “office of the Principal Officer” as a co- administrator? Practical issues i.e. “independent” Principal Officer –additional costs to scheme (infrastructure) –introduces a new vested interest stakeholder –accessibility of offsite Principal Officer –accreditation of the “office of the Principal Officer” as a co- administrator?

11. Clause 22 : Eligibility : Trustees or Principal Officers Recommendation –Allow anybody to serve as a trustee up to 50% of trustees (other trustees elected) –Allow trustees to choose their principal officer –Registrar has powers to act upon abuse Or –Extend restrictions consistently to include anyone associated with any vested interest Recommendation –Allow anybody to serve as a trustee up to 50% of trustees (other trustees elected) –Allow trustees to choose their principal officer –Registrar has powers to act upon abuse Or –Extend restrictions consistently to include anyone associated with any vested interest

12. Controversy remains unresolved by Bill Regulatory Authority remains unresolved Current Act and Regulations are inadequate Insufficient transparency or consistency Controversy remains unresolved by Bill Regulatory Authority remains unresolved Current Act and Regulations are inadequate Insufficient transparency or consistency Clause 25 : Broker Commission

13. Recommendations –Resolve the regulatory Authority issue –Incentivise desired behaviours (e.g. new vs churn) –Transparent commission structures –Differentiate rewards for services (e.g. sales / service) –Council facilitate self-regulation Recommendations –Resolve the regulatory Authority issue –Incentivise desired behaviours (e.g. new vs churn) –Transparent commission structures –Differentiate rewards for services (e.g. sales / service) –Council facilitate self-regulation Clause 25 : Broker Commission

14. Thank you