Deputy Speaker and hon members, as has been said, there are similarities between the two Bills we are dealing with.
In this case we are dealing with the insurance industry and, as has already been said, the insurance industry plays an important role in the economic cycle as it provides that mechanism of reallocation and pooling of resources, so that provision is made for certain eventualities and sharing of risk.
If there is a compelling argument for state intervention that is accepted by even the most ardent market fundamentalists, it is that of capital market imperfection. This is classified as a special case of market failure and, therefore, it is of the utmost importance that the developmental state keeps a constant watch over the capital market in the interest of the economy and the population at large.
In the ANC's strategy and tactics we speak of a national democratic society that has a mixed economy with state, co-operative, and other forms of social ownership in private capital. The balance between social and private ownership of investment resources should be determined on the balance of evidence in relation to national development needs and concrete tasks of the national democratic revolution at any point.
It goes on to state that in this regard the state will relate to private owners of investment resources in the context of national objectives to build a better life for all. Through its various capacities the state would encourage socially beneficial conduct on the part of private business. Similarly, through such capacities it will ensure that these investors are able to make reasonable returns on their investments.
In response to these commitments, the ANC-led government continues to consistently align the regulatory framework in the insurance industry to the current needs and conditions of this national democratic society.
The Bill before this House today seeks to strengthen the legislative framework for a sound and well-regulated insurance services industry and to provide financial market stability to the industry players, as well as consumers. This has been necessitated by a number of factors, among which has been the gaps that have been identified in existing statutes during the implementation - particularly the Long-term Insurance Act of 1998 and the Short-term Insurance Act of 1998, commonly known as Act 52 of 1998 and Act 53 of 1998, respectively.
It also seeks to clarify the demarcation between health insurance and medical schemes, as defined in the relevant legislation, which my colleague, Ntombikayise Sibhidla, will be talking about.
It further updates the outdated references to applicable legislative provisions, such as the Companies Act of 1973, which has since been amended by the Corporate Laws Amendment Act of 2006, as well as the Medical Schemes Act of 1998, which is Act 131 of 1998.
An important feature of this amendment is that of consumer protection, particularly in the long-term insurance industry. Clause 16 introduces a provision that ensures that policies sold to clients are actuarially sound. Subsection 1 of this section clearly states that insurers shall not enter into any particular kind of long-term policy unless the statutory actuary is satisfied that the premiums, benefits and other values thereof are actuarially sound and that the awarding of bonuses to policyholders is done in accordance with the principles and practices of financial management of the long-term insurer to the absolute satisfaction of the statutory actuary.
A further protection of consumers comes in the form of the limitation of remuneration to intermediaries, which has been the subject of discussion between National Treasury and the industry for a very long time, and has culminated in the signing of the statement of intent some time last year. This is given legal effect through clause 17, which substitutes section 49 of the Long-term Insurance Act of 1998. It states that all commissions and/or remuneration shall only be payable in terms of the regulations. This is intended to ensure that the remuneration of intermediaries does not unnecessarily prejudice the policyholders due to the asymmetry of information.
In the interests of our participatory democracy, an open process of consultation between the industry and National Treasury was allowed to continue even after the department had informed us that most of these matters had been adequately canvassed. The committee did this because when the department briefed the committee, most submissions indicated that they were not given enough time to consult with their constituents.
While we agree that the consultation between the department and the stakeholder is separate from the parliamentary process, the two are inextricably linked. As a result, when the industry raised concerns regarding a lack of consultation with National Treasury and the Financial Services Board, we proposed further engagement which culminated in a workshop that attracted a very broad spectrum of stakeholders and resulted in some substantial amendments to the Bill as it was originally drafted. This, to a great extent, assisted our process in as far as consultation was concerned.
Whilst this process was under way, the committee reopened the process so as to allow anybody that may have missed the opportunity to make submissions to do so. During this period the committee did not receive any additional requests, even though there were media reports in this regard and all those who had concerns were duly informed of the extension. I must say that even though the executive had discharged its responsibility in respect of consultation, the department and the Financial Services Board continued to engage with the industry, going the extra mile, if I may say so.
I must say that I was surprised to learn that one player in the industry still feels that the committee did not comply with section 59(1) of our Constitution, which enjoins the National Assembly to facilitate public involvement in the legislative and other processes of the Assembly. I want to submit before this House that the only people that still do not have a voice are the consumers, and not the industry.
I find it very strange that the stakeholder that had an opportunity and resources to make submissions chose not to make a submission to the committee, but to resort to unwarranted legal recourse after the Bill had been passed by the committee. I would like to submit that, in the absence of consumer activism in South Africa, the people's Parliament must extend the service to our constituency offices and deeper into our communities.
Angivume ukuthi uma kukhona lapho sehluleke khona ukulalela imizwa yabantu ngokwale ntando yeningi ekudingideni lo Mthethosivivinywa, kulapho singafinyelelanga kubantu bonke abathintekayo yilo Mthethosivivinywa, ikakhulu labo abasemakhaya lapho kungafinyeleli ubuchwepheshe besimanje namaphephandaba, lapho sikhangisa khona uma kuzoba nezithangami. Mhlawumbe ngokuzayo kuyofanele siye kubo abantu bakithi, siyeke ukukwitiza isiNgisi esingapheli uma sishaya imithetho kanti ibathinta ngqo. (Translation of isiZulu paragraph follows.)
[Let me admit that there were instances where we failed to listen fully and democratically to the people's inputs concerning this Bill, and, as a result, we did not reach all those that are affected by this Bill, especially those in remote rural areas where modern technology and newspapers cannot be easily accessed, which are the media that we use to advertise our public hearings. Maybe next time we will need to go to our people and stop speaking in a foreign tongue - English - when we pass the laws that directly impact on them.]
As I conclude, allow me to share with this House the evidence of consultation that saw some measurable results. A letter written by the Aids Law Project on 4 June 2008, in which a number of issues were raised, and a subsequent one which followed on 12 June 2008, in which they expressed their appreciation to the department after their concerns were addressed, are just two examples.
I would like to thank everyone who participated in this process for their valued contribution, particularly National Treasury officials, the Financial Services Board, the Department of Health, the medical schemes industry, the insurance industry and the committee members who continue to be overworked and underpaid. The ANC supports the amending Bill. I thank you.