FIFI PETERS: South African long-term insurance companies could possibly be in sizzling water if the accusations of the Competition Commission in opposition to them are above board. The main long-term insurance companies had and could have their places of work throughout the nation raided by the fee, [which] believes that these companies have been fixing the costs of issues like funeral plans or funeral cowl, incapacity cowl, persistent remedy cowl, and investment-related merchandise like retirement annuities. We know when companies repair costs they get extreme income.
Read: CompCom raids eight main insurance companies
We’ve bought Sipho Ngwema, the pinnacle of communications on the Competition Commission, for extra. Sipho, thanks a lot to your time. A extremely troubling story on this setting – if true – that companies are being opportunistic, particularly on merchandise which might be so essential and essential for one’s wellbeing.
Nonetheless, your investigation into the long-term insurance sector began in January 2021. We have been nonetheless preventing the pandemic fairly strongly at the moment. I’m undecided – it was both the third or the fourth wave at the moment. But what did you discover from that investigation that has led you to raid or to transfer on a raid on these companies?
SIPHO NGWEMA: Good night, Fifi, good night to the listeners, and thanks for having us on the programme.
The Commissioner of the Competition Commission Tembinkosi Bonakele, launched the investigation in January 2021. This was after the fee obtained data that appears to be a breach of the Competition Act with regard to the companies that we raided at the moment. The data means that there might have been collusion, which led to price-fixing amongst these companies, on a wide range of long-term life merchandise.
That sharing of knowledge, which is in breach of the Competition Act, is [what] led us to then raid these companies – eight of them at the moment, 5 in Gauteng, two in Western Cape and one in KwaZulu-Natal – on the lookout for extra data that will substantiate these allegations.
At this level we’re nonetheless gathering proof that will help us in regard to the data that we’ve already. It appears to counsel that there might have been price-fixing amongst these companies. So we’re collating paperwork, collating information that’s obtainable, even in digital devices, which might help us in furthering that investigation, primarily based on the allegations that we’ve obtained.
FIFI PETERS: As to the companies in query, we’re speaking about BrightRock, Discovery, FMI, Hollard Insurance, Momentum, Old Mutual [Insure], Professional Provident Society (PPS), and Sanlam. I feel that it will be significant – for a few of our listeners who don’t know precisely who the eight are – for us to identify them.
The raid occurred at the moment. How did it go? And these companies, did they comply, have been they forthcoming with the data that you just took from their places of work?
SIPHO NGWEMA: The raids are persevering with. So far I haven’t obtained any data that there might have been difficulties with regard to gaining entry or accessing the paperwork that we have been on the lookout for with regard to the varied companies that you just talked about in all these eight websites. However, we might have the ability to get all the data in there, whether or not or not every thing went easily in every single place, as soon as everybody is finished, after we are doing a debriefing. However, as we collate data as we go alongside, there appears to be nothing up to now that means that there’s been any resistance or any hindrance of the law-enforcement motion that was going down at the moment.
I feel that that’s good, as a result of we’ve been allowed to ensure that we proceed with our mandate when it comes to the act, and we’re allowed to proceed with our investigation. We hope that’s going to be the scenario going ahead, as a result of at this level I need to add, and I would like to emphasise, that
we’re nonetheless gathering proof and, if after we’ve sifted by means of that data, [we hope to be] in a position to confirm whether or not or not certainly the allegations that we’ve proper now could be substantiated.
FIFI PETERS: How lengthy presumably will the raids proceed for?
SIPHO NGWEMA: It relies upon, as I stated, on the quantity of knowledge that they’re getting, on the quantity of documentation that they have to undergo. We’ll obtain data because the evening goes alongside, and we should always have the ability to know most likely later into the evening whether or not or not we should always have the ability to proceed tomorrow. But for now the operation continues to be occurring. Our official *** that data to ensure that us to have the ability to ensure that it’s correctly ready in a doc that’s in a position to be taken to our head workplace in order that we are able to undergo it and proceed with the investigation.
FIFI PETERS: Based on the data that you’ve – of which you’re clearly strongly convicted that you’ve a case in opposition to these insurance companies – precisely what do you assume they did right here? In phrases of the costs that buyers are paying for funeral cowl and incapacity cowl and persistent medical cowl and retirement annuities, what do you assume these companies did and the way far more when it comes to worth have we had to pay on account of their alleged misbehaviour?
SIPHO NGWEMA: Yes, certainly, Fifi. Look, the data that we’ve has handed the credibility check, and because of this we took the motion that we took at the moment.
And presently it appears with regard to the data that we’ve, that these companies shared data and stuck costs of long-term insurance merchandise when it comes to risk-related merchandise, and different charges of funding merchandise – and so they have been in a position due to this fact to alter costs of their current merchandise and different new insurance merchandise. And the merchandise that we’re speaking about, I feel you briefly talked about them, simply when it comes to the long-term insurance market, they’re providing as you already know investments and risk-related insurance merchandise.
In this specific occasion, the data that we’ve is that there was collusion in regard to life cowl, funeral cowl, incapacity cowl, dreaded illness and persistent medical situation covers, in addition to different investment-related merchandise like retirement annuities.
It appears these companies due to this fact adjusted their costs. They then amongst themselves mounted the value. And ultimately a part of the problem – and because of this we’ve this mandate within the Competition Commission – is that there was nearly no competitors.
When there’s competitors, costs can go down and that’s handed on to the patron and the patron is in a position to have a selection out there. You have higher high quality and higher costs.
But when these individuals do that and so they all look the identical, it’s very troublesome for a shopper to get a greater worth as a result of they’ve amongst themselves agreed on a specific worth.
So that is the allegation that we’re investigating – and if it occurred, it means due to this fact that the patron on this specific occasion was deprived, there was breach of the legislation. But in fact, as I stated, we at the moment are gathering that data and we’ll see ultimately whether or not or not certainly there was a breach and [if] due to this fact anybody has to be prosecuted.
FIFI PETERS: Again, as a result of if certainly it occurred, it gained’t be for the primary time that it’s taking place. We noticed it with bread. We noticed it with tyres, sure medicines associated to HIV. The banks are additionally accused of doing humorous issues with the rand. It retains taking place. I’m questioning what alerts that is sending to the fee [regarding] whether or not the penalties that you just put in place on these companies who’re discovered to break competitors legal guidelines are literally working, if this retains taking place once more.
SIPHO NGWEMA: Fifi, I do know that there’s plenty of criticism with regard to the penalties which might be imposed on these companies, or a few of the agreements that we attain with those that have in by hook or by crook admitted to have taken half on this. However we, because the fee, we because the officers of the fee, don’t make the legal guidelines, we implement them. We get the legal professionals. We can’t impose that which isn’t prescribed within the legislation.
Parliament makes the legal guidelines and so they assume that, with regard to these specific offenses, these are the parameters when it comes to fines that want to be imposed.
Therefore the tribunal or anybody within the competitors authority can’t do far past what the legislation prescribes.
It is the obligation of those that make the legal guidelines and people who make the insurance policies to sharpen these devices. So there’s little or no that we are able to do with regard to the imposition of fines or every other type of punishment. All we’ve to do, as we’ve the legislation, we’ve to work inside what we’ve been given by those that make the legislation.
FIFI PETERS: All proper. Sipho, thanks a lot for that. We will likely be following that story with you. Keep us up to date, please. Sipho Ngwema is the pinnacle of communications on the Competition Commission.
