Dis-Chem has defended its health insurance partnership with Centriq and Kaelo insurance products, saying a recent regulatory ruling should be seen as a clarification of process rather than a threat to retail-led healthcare models that are helping thousands of South Africans access affordable care.
Last week Business Day reported that thousands of health insurance policyholders could be affected by the move related to Centriq Insurance Company and Dis-Chem Pharmacies after the Council for Medical Schemes (CMS) ruled that the branding of certain products breached the Medical Schemes Act.
The CMS found that changes to the branding and presentation of Centriq’s MyHealth insurance products under the Dis-Chem name created the impression of a new product and should have been submitted for formal regulatory approval.
While the ruling centres on a technical issue around branding, its implications stretch beyond the companies involved.
Dis-Chem’s long-term strategy is focused on healthcare, with pharmacies positioned as entry points for primary care, wellness services and access to healthcare funding products.
The decision raises broader questions about how far large retail brands can go in attaching their names to regulated health products without triggering additional regulatory scrutiny.
Dis-Chem insists the ruling does not undermine retail-led healthcare partnerships. Instead, it says it reinforces the importance of treating branding and presentation as material regulatory changes, rather than cosmetic marketing decisions.
The group said that with only about 17% of the population belonging to private medical schemes, leaving many people reliant on the public sector or without formal healthcare cover, products like MyHealth help bridge the gap.
It added that market conduct indicators show strong and appropriate usage of these products, with no evidence of customer confusion or mis-selling.
Dis-Chem had acquired a 25% stake in Kaelo Group, a provider of essential healthcare solutions, in 2021, and expanded its strategy in 2022 with the launch of medical insurance and gap cover products for individual customers under the Dis-Chem Health brand, while Kaelo continued to focus on the corporate market under its own name.
The medical insurance offerings are designed to cover everyday healthcare needs rather than catastrophic events.
Integrated approach
Benefits include nurse-led care, virtual and in-person GP consultations, medication, basic dentistry and optometry, preventative health screenings and mental health support, all aimed at “lowering healthcare costs, expanding access and supporting South Africa’s longer-term goal of universal healthcare”, the company said.
The CMS ruling followed an appeal by Centriq, the underwriting insurer for the MyHealth products, which was dismissed by the Appeals Board.
The regulator found that the way the products were branded and presented under the Dis-Chem name amounted to a material change that should have been submitted for approval, even though the underlying product remained the same.
According to Dis-Chem, the finding did not challenge the legality of the MyHealth products themselves, nor the principle of white-labelling, which allows insurers to market products under a partner’s brand. The group said no customers lost cover, no benefits were altered and the insurer was always clearly disclosed.
The MyHealth products were approved by the regulator several years ago and operate under the exemption framework that allows certain health insurance products to sit outside traditional medical schemes.
Dis-Chem said the dispute related solely to naming and presentation, not to the structure, benefits or legality of the products.
Centriq and Kaelo, which administers the products, have both said they were clearly identified across all customer touchpoints, including policy documents, terms and conditions and marketing material.
The regulator had warned that branding and presentation changes can have regulatory consequences.
In Circular 48, the CMS cautioned that exempted insurers must follow strict processes when making changes and that non-compliance could result in enforcement action, including penalties or the withdrawal of exemptions.
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