FIFI PETERS: South African long-term insurance coverage corporations may very well be in scorching water if the accusations of the Competitors Fee in opposition to them are above board. The key long-term insurance coverage corporations had and may have their places of work throughout the nation raided by the fee, [which] believes that these corporations have been fixing the costs of issues like funeral plans or funeral cowl, incapacity cowl, persistent medicine cowl, and investment-related merchandise like retirement annuities. We all know when corporations repair costs they get extreme income.
Learn: CompCom raids eight main insurance coverage corporations
We’ve acquired Sipho Ngwema, the pinnacle of communications on the Competitors Fee, for extra. Sipho, thanks a lot on your time. A very troubling story on this surroundings – if true – that corporations are being opportunistic, particularly on merchandise which can be so crucial and vital for one’s wellbeing.
Nonetheless, your investigation into the long-term insurance coverage sector began in January 2021. We have been nonetheless preventing the pandemic fairly strongly at the moment. I’m unsure – it was both the third or the fourth wave at the moment. However what did you discover from that investigation that has led you to raid or to maneuver on a raid on these corporations?
SIPHO NGWEMA: Good night, Fifi, good night to the listeners, and thanks for having us on the programme.
The Commissioner of the Competitors Fee Tembinkosi Bonakele, launched the investigation in January 2021. This was after the fee acquired info that appears to be a breach of the Competitors Act with regard to the businesses that we raided right this moment. The knowledge means that there might have been collusion, which led to price-fixing amongst these corporations, on a wide range of long-term life merchandise.
That sharing of data, which is in breach of the Competitors Act, is [what] led us to then raid these corporations – eight of them right this moment, 5 in Gauteng, two in Western Cape and one in KwaZulu-Natal – searching for extra info which will substantiate these allegations.
At this level we’re nonetheless gathering proof which will assist us in regard to the data that now we have already. It appears to counsel that there might have been price-fixing amongst these corporations. So we’re collating paperwork, collating knowledge that’s accessible, even in digital devices, which might help us in furthering that investigation, based mostly on the allegations that now we have acquired.
FIFI PETERS: As to the businesses in query, we’re speaking about BrightRock, Discovery, FMI, Hollard Insurance coverage, Momentum, Outdated Mutual [Insure], Skilled Provident Society (PPS), and Sanlam. I feel that it is necessary – for a few of our listeners who don’t know precisely who the eight are – for us to call them.
The raid occurred right this moment. How did it go? And these corporations, did they comply, have been they forthcoming with the data that you simply took from their places of work?
SIPHO NGWEMA: The raids are persevering with. Up to now I haven’t acquired any info that there might have been difficulties with regard to gaining entry or accessing the paperwork that we have been searching for with regard to the assorted corporations that you simply talked about in all these eight websites. Nonetheless, we’d have the ability to get all the data in there, whether or not or not every little thing went easily in every single place, as soon as everybody is completed, once we are doing a debriefing. Nonetheless, as we collate info as we go alongside, there appears to be nothing to this point that implies that there’s been any resistance or any hindrance of the law-enforcement motion that was happening right this moment.
I feel that that’s good, as a result of now we have been allowed to ensure that we proceed with our mandate by way of 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 have to add, and I wish to emphasise, that
we’re nonetheless gathering proof and, if after now we have sifted via that info, [we hope to be] in a position to verify whether or not or not certainly the allegations that now we have proper now may be substantiated.
FIFI PETERS: How lengthy probably will the raids proceed for?
SIPHO NGWEMA: It relies upon, as I mentioned, on the quantity of data that they’re getting, on the quantity of documentation that they need to undergo. We’ll obtain info because the evening goes alongside, and we should always have the ability to know in all probability later into the evening whether or not or not we should always have the ability to proceed tomorrow. However for now the operation continues to be occurring. Our official *** that info to ensure that us to have the ability to ensure that it’s correctly ready in a doc that is ready to be taken to our head workplace in order that we will undergo it and proceed with the investigation.
FIFI PETERS: Primarily based on the data that you’ve got – of which you might be clearly strongly convicted that you’ve got a case in opposition to these insurance coverage corporations – precisely what do you suppose they did right here? When it comes to the costs that customers are paying for funeral cowl and incapacity cowl and persistent medical cowl and retirement annuities, what do you suppose these corporations did and the way way more by way of worth have we needed to pay because of their alleged misbehaviour?
SIPHO NGWEMA: Sure, certainly, Fifi. Look, the data that now we have has handed the credibility take a look at, and because of this we took the motion that we took right this moment.
And presently it appears with regard to the data that now we have, that these corporations shared info and glued costs of long-term insurance coverage merchandise by way of risk-related merchandise, and different charges of funding merchandise – they usually have been in a position due to this fact to regulate costs of their present merchandise and different new insurance coverage merchandise. And the merchandise that we’re speaking about, I feel you briefly talked about them, simply by way of the long-term insurance coverage market, they’re providing as you recognize investments and risk-related insurance coverage merchandise.
On this explicit occasion, the data that now we have 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 corporations due to this fact adjusted their costs. They then amongst themselves fastened the worth. And ultimately a part of the problem – and because of this now we have this mandate within the Competitors Fee – is that there was just about no competitors.
When there may be competitors, costs can go down and that’s handed on to the patron and the patron is ready to have a selection available in the market. You’ve got higher high quality and higher costs.
However when these folks do that they usually all look the identical, it’s very troublesome for a client to get a greater worth as a result of they’ve amongst themselves agreed on a selected 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 explicit occasion was deprived, there was breach of the legislation. However in fact, as I mentioned, we at the moment are gathering that info and we’ll see ultimately whether or not or not certainly there was a breach and [if] due to this fact anybody must be prosecuted.
FIFI PETERS: Once more, 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 indicators that is sending to the fee [regarding] whether or not the penalties that you simply put in place on these corporations who’re discovered to interrupt competitors legal guidelines are literally working, if this retains taking place once more.
SIPHO NGWEMA: Fifi, I do know that there’s a number of criticism with regard to the penalties which can be imposed on these corporations, 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. Nonetheless we, because the fee, we because the officers of the fee, don’t make the legal guidelines, we implement them. We get the attorneys. We will’t impose that which isn’t prescribed within the legislation.
Parliament makes the legal guidelines they usually suppose that, with regard to those explicit offenses, these are the parameters by way of fines that have to be imposed.
Due to this fact the tribunal or anybody within the competitors authority can not do far past what the legislation prescribes.
It’s the obligation of those that make the legal guidelines and those that make the insurance policies to sharpen these devices. So there’s little or no that we will do with regard to the imposition of fines or another sort of punishment. All now we have to do, as now we have the legislation, now we have to work inside what now we have been given by those that make the legislation.
FIFI PETERS: All proper. Sipho, thanks a lot for that. We shall be following that story with you. Maintain us up to date, please. Sipho Ngwema is the pinnacle of communications on the Competitors Fee.