According to available information, the South African Competition Commission is investigating an alleged cartel that has been operating since 1989.
The Competition Commission has confirmed that it is still investigating allegations of price fixing and collusion among major life insurers in South Africa.
The investigation first came to light three years ago in August 2022 when the commission launched dramatic ‘dawn raids’ on the offices of eight insurers.
However, the matter has since fallen silent.
At the time, the commission said that it had reasonable grounds to suspect that the insurers had been colluding to fix prices or trading conditions on a host of products.
This included investement products tied to retirement annuities, life insurance cover, chronic medical cover, disability cover and funeral assistance benefits.
While the commission had been investigating the matter since January 2021, it acted in 2022, launching ‘dawn raids’ on the businesses in August, seizing documents and electronic data tied to the allegations.
The accused insurers included BrightRock Life; Discovery; FMI, a division of Bidvest Life Limited; Hollard; Momentum; Old Mutual Insure; PPS and Sanlam. The insurers denied any wrongdoing.
However, since the commission’s initial statement on the raids and follow-up details from a News24 Promotion of Access to Information query on the matter, there has been no update.
BusinessTech asked the commission and several insurers implicated about the state of the investigation, and was met with reticence.
The commission confirmed only that the investigation was ongoing, with no new information to add.
“The investigation remains ongoing, and we can therefore not provide additional information at this stage,”
said commission spokesperson Siyabulela Makunga.
Insurers have also been coy on the matter, either not responding to queries on the matter or directing them to the Competition Commission.
According to the commission, the raids were based on information at its disposal that pointed to the companies under investigation sharing information on premium rates for risk-related products and fees for investment products.
This enabled them to allegedly adjust the prices of their existing and new insurance products.
Market commentators at the time cast some doubt on the grounds for the investigation, but legal experts noted that to greenlight the raids, the commission must have presented tangible evidence to the courts.
A PAIA request submitted by News24revealed in 2023 that the commission was looking into historic data and evidence of the alleged collusion dating back to 1989.
The insurers are accused of having a so-called ‘rate book’ during this time, in which information regarding prices of certain products was allegedly recorded and exchanged between different companies.
As technology marched forward, this is said to have moved to the exchange of floppy disks with sensitive pricing information.
In more recent times, it is alleged that pricing information was uploaded onto password protected online platforms, and the passwords were shared between insurers.
Responding to queries from BusinessTech, one of the biggest names in the investigation, Discovery Life, denied any collusion.
However, it acknowledged the investigations and said that it was cooperating with the commission.
“Discovery Life continues to cooperate with the Competition Commission and maintains that it has not and never will collude with any competitor,”
it said.
Source: Business Tech
