Malawi competition commission pounces on insurers
The Competition and Fair Trading Commission (CFTC) is investigating the Insurance Association of Malawi (IAM) for possible price fixation which is a violation of fair trading practices.
Speaking in a telephone interview on Tuesday on practices in the sector, CFTC executive director Charlotte Malonda said they conducted a dawn raid on December 11 at IAM offices after receiving information of possible price fixing by the association.
“The raid yielded results which are raising reasonable suspicion of a cartel activity in that sector. There is a suggestion that indeed the association has been serving as a forum for discussing premiums charged, particularly for third party cover for motor vehicles. The documents retrieved include minutes of meetings and communication to members on the agreed rates. Further investigations are underway,” said Malonda.
However, IAM president Dorothy Chapeyama, in telephone interview on Tuesday, said the association will respond to the commission’s query within the stipulated period.
“The members of the association will respond to the investigation within the stipulated time which is 21 days,” she said.
In 2011, the insurance industry announced a more than 130 percent increase on minibus premiums effective 2012 which was later withdrawn after negotiations with stakeholders including the Ministry of Transport.
Recently, a leader in the insurance industry, Nico General Insurance Company chief executive officer Eric Chapola was quoted in The Nation having said their company will raise premiums by about 30 percent in 2014 and attributed the increase to a fraudulent legal cartel that includes lawyers that specifically target motor insurance and are aimed at swindling the industry. He argued that the fraudulent practice has driven up their operating costs.
The CFTC is an autonomous agency of the government mandated to regulate, monitor, control and prevent acts or behaviours which are likely to adversely affect competition and fair trading in Malawi.
The commission investigated the Travel Agents Association of Malawi (Taam) on price recommendation which it has since withdrawn. The CFTC also investigated the sugar industry against anti competitive behaviour which was also followed.
The commission also recently investigated private schools for allegedly violating provisions under fair trading practices.
