Dear Business Partner,

For many consumers gap cover premiums are too high!

Like many other industries have had to evolve rapidly amidst the challenges that 2020 has thrown at us, the gap cover industry will also need to make some adjustments if it is to remain viable.

It is obvious that all gap cover members are already carrying the heavy cost of medical scheme cover, which can amount to many thousands of rand each month. Gap cover obviously provides them with peace of mind but for many this additional cost is starting to become somewhat more than just a small spend, with many comprehensive gap cover products now costing close on R500 per month.

This is because a major problem with the pricing structures of most gap cover providers is that everyone is charged the same premium – hence creating substantial cross subsidisation from low risk members to high risk members. Cross-subsidy occurs either from single members and single parents to larger families or from younger members to older members. Consider that a person in their twenties is paying the same premium as someone in their fifties, yet hospitalisation costs for someone in their fifties is, on average, double that of someone in their twenties.

Equally so, a single parent with one child is paying the same premium as a couple with 2 children. So, one adult plus one child is paying the same premium as two adults plus two children. Quite simply, it makes no sense.

A third area in which there is substantial cross subsidisation is from members on richer medical scheme options to members on lower medical scheme options. Consider that a medical scheme option covering in-hospital costs at 200% of tariff is paying twice as much of the providers’ account than an option covering at 100% of tariff, which substantially reduces the claim against the gap cover insurer. Members on medical scheme options with 200% cover should be paying much less than they are for their gap cover.

This pricing disparity is not sustainable and is the main reason why so many consumers are paying way more than they should be for their gap cover.

Cinagi has maintained a principle of fairness and sustainability which lead us to structure our premiums on the exact family size, age bands and the medical scheme cover level.

And, importantly, this is achieved without sacrificing benefits. The above pricing strategy combined with our single product approach means that we can maintain comprehensive benefits and offer lower premiums.

Given the tough economic times we are all facing, this is a win in anyone’s book. We look forward to helping you provide superior value for your clients.

Best wishes and keep safe,


“I called an insurance company for a quote.

They gave me one of Oscar Wilde’s best.”

Jarod Kintz, American humorist