Eight insurers and state-owned National Home Mortgage Finance Corporation (NHMFC) have been charged by the Philippine Competition Commission (PCC) over allegedly anti-competitive agreements in providing mortgage redemption insurance.
In a statement, the PCC said that the insurers have been “exclusively and indefinitely” providing mortgage redemption insurance (MRI) to borrowers whose loans had been assumed by the NHMFC. MRI will pay off an existing mortgage if the policyholder dies before it is completely paid off.
The insurers are: Beneficial Life Insurance, Country Bankers Life Insurance, First Life Financial, Fortune Life Insurance; Manila Bankers Life Insurance, Manulife Philippines, Philippines International Life Insurance, and United Life Assurance. Aside from the insurers, several officials of the NHMFC were also charged for administering the agreements.
The PCC alleged that the agreements, one of which was signed in 1980, has deprived borrowers of the right to choose a carrier to buy mortgage redemption insurance from.
The complaint filed by the PCC’s enforcement office said the deals resulted in “poor service, unfavourable premium rates, and lack of options to the detriment of the beneficiaries of the MRI coverage.”
According to the statement, the investigation began when the NHMFC asked the commission to review its agreements with the insurance pool. The government-owned company had previously tried to terminate the agreement, but faced the threat of being sued by the insurance companies.
If found guilty of violating the Philippines’ competition law, companies may be made to pay a fine of up to PHP100 million (around US$2 million).
