Class-action suit an option in collusion case
The eight insurance companies that are being investigated for collusive practices could, in theory, face a class-action suit by affected clients, if found guilty.
However, the Mail & Guardian notes that precedence suggests such a path would not be smooth sailing for the complainants.
As previously reported, the authorities are probing Old Mutual, Sanlam, Discovery, BrightRock, FMI, Hollard, Momentum and the Professional Provident Society for alleged collusive behaviour and recently conducted searches at their premises.
The Competition Commission said it had ‘reasonable grounds’ to suspect the insurers had worked together to fix prices and/or trading conditions regarding fees for investment products such as retirement annuities and premiums for risk-related products.
Werksmans director Ahmore Burger-Smidt said if the insurers are found to have contravened the Competition Act and engaged in collusive practices, consumers can claim civil damages.
However, Burger-Schmidt cautioned that this would not be easy.
‘The problem in instituting a class action as a consumer is that you have to demonstrate the damages suffered. The big hurdle in all of this is how to quantify the damage for everyone involved,’ Burger-Smidt said.
Article disclaimer: While we have made every effort to ensure the accuracy of this article, it is not intended to provide final legal advice as facts and situations will differ from case to case, and therefore specific legal advice should be sought with a lawyer.