I have written about the banking and insurance industries before and I have seldom had nice things to say about them. I still don’t.
I basically see all insurances, including medical aids, as massive, legalised pyramid schemes that exploit our fears.
They thrive because we fear getting gravely ill, getting into an accident, or falling victim to crime.
So we pay large portions of our income to companies that promise to look after us should any of those fears ever become a reality.
And if it never does, then all our money goes towards subsidising victims and financing those companies’ running costs.
And of course you don’t get any of it back.
Basically, we are all throwing our money down a bottomless corporate pit that greases the gears of companies that claim to care, but in reality operate for the purpose of profit.
One of the definitions of a pyramid scheme is that if every “investor” claimed all their “dividends” at the same time, the scheme collapses.
The reason is the model uses Peter’s money to pay Paul, so there isn’t enough money to go around.
The same thing applies to insurance.
If we all had to claim the value promised to us at the same time, the company would collapse.
The reason is exactly the same – the model uses Peter’s money to pay Paul.
The difference is, these schemes are legal and we have bought into them and come to rely on them, because we are unable to save up on our own for a rainy day.
So it came as no surprise to me last week when the Competition Commission raided the offices of some of our biggest insurance companies, including Hollard, Momentum, Old Mutual and Sanlam.
The Commission has been busy investigating allegations of collusion and price fixing since January last year.
If the allegations are true, it would mean that these competing companies have been konkelling to make sure they all charge roughly the same rates for things like retirement annuities, life insurance and funeral cover.
Things are so bad in these industries that together they risk having the country’s entire financial sector grey-listed internationally.
And it should make us all sick to the stomach, especially since we are forced by our programming to keep using them.
At least after my last rant about FNB, they contacted me and helped me to open a cheaper account that wasn’t eroding away my savings for no reason.
So for doing the decent thing, thank you FNB.
dailyvoice@inl.co.za