CompCom raids eight major insurance companies

The Competition Commission (CompCom) says it has reasonable grounds to suspect that eight major SA life insurance companies have engaged in collusive practices to fix prices and/or trading conditions in respect of fees for life insurance and other investment products.

In a statement released on Thursday it said it is conducting search and seizure operations at BrightRock Life; Discovery; FMI, a division of Bidvest Life; Hollard Insurance Group; Momentum, a division of MMI; Old Mutual Insure; Professional Provident Society (PPS) and Sanlam.

The investment products include retirement annuity and premiums for risk-related products, namely, life insurance cover such as dread disease cover/chronic medical condition cover, disability cover, life cover and funeral assistance benefits, in contravention of section 4(1)(b)(i) of the Competition Act.

“According to the information at the disposal of the commission, the companies under investigation share information on premium rates for risk-related products and fees for investment products, which enables them to adjust the prices of their existing and new insurance products.

“The search and seizure operations are being conducted as part of an ongoing investigation that was initiated by the Commissioner in January 2021. The operations are being conducted at five sites in Gauteng, two in Western Cape, and one in KwaZulu-Natal.”

Documents and electronic data will be seized and analysed with other information gathered to determine whether the insurers have contravened the Act.

Commissioner Tembinkosi Bonakele said: ““The search and seizure operation is part of the routine process of evidence gathering and we urge all involved to allow the investigation to run its course. The Commission will at an appropriate stage reveal the outcome of the investigation.”

JSE-listed Momentum Metropolitan Holdings (MMI) confirmed in a statement on Thursday afternoon that officials from the CompCom visited its head office in Centurion.

“As per documentation presented by the Competition Commission, they are undertaking a wide investigation in the insurance industry relating to product price fixing.”

“We are cooperating fully with their investigation and are providing them with the required documentation relevant to their investigation,” said MMI.

“We have no reason to believe that we are guilty of price fixing. We reiterate our commitment to ongoing compliance with all regulatory requirements,” it added.

The other insurers are yet to comment on the raids.

Developing story: Moneyweb is approaching the implicated firms for comment.