THE Philippine Competition Commission’s Enforcement Office (PCC) has charged a pool of insurers and state-led secondary mortgagor for entering into anti-competitive agreements that cornered a type of insurance offered to borrowers for nearly four decades.

In a statement, the PCC’s investigative and prosecutorial arm found that eight insurance companies have been “exclusively and indefinitely” providing mortgage redemption insurance (MRI) to borrowers whose loans have been assumed by the National Home Mortgage Finance Corp. (NHMFC).

The MRI ensures that outstanding loans will be settled in the event of the borrower’s death.

NHMFC, as the secondary mortgagor, manages mortgage loan portfolios that are originated by banks, housing developers, and other primary lenders that offer loans for low-cost housing.

Borrowers whose home loans have been assumed by the secondary mortgagor obtain an MRI as a form of security.

The PCC said the exclusive arrangement “deprived NHMFC and the housing loan borrowers of choosing MRI coverage from other providers which may offer better terms and conditions at lower premium rates.”

The Enforcement Office charged Beneficial Life Insurance Co., Inc.; Country Bankers Life Insurance Corp.; First Life Financial Co., Inc.; Fortune Life Insurance Co., Inc.; Manila Bankers Life Insurance Corp.; Philippines International Life Insurance Co., Inc.; The Manufacturers Life Insurance Co. (Phils), Inc.; and the United Life Assurance Corp. for violation of Section 14 of the Philippine Competition Act (PCA).

Also charged were the pool’s executive committee members Ignacio A. Macrohon, Jr., Daniel M. Mercado, Jr., Jaime M. Santiago, and Evelyn T. Carada as they administered the agreements.

The PCC said the executive committee facilitated the exclusive agreements that the insurance pool enjoyed without any competitive constraints for 40 years.

“Any insurance company wishing to offer MRI to NHMFC is effectively required to go through the pool, thereby foreclosing competition in the relevant market. Additionally, the agreements cannot be terminated by mere notice, aggravating their foreclosure effect,” it said.

BusinessWorld sought comment from the NHMFC, Beneficial Life, Country Bankers, First Life Financial and Fortune Life, but no response was given as of press time.

The PCC’s enforcement office began an investigation after the NHMFC asked the commission to review its agreements with the insurance pool “Pag-IBIG MRI Pool” while the PCA was still in its two-year transition period.

The NHMFC previously attempted to terminate the agreements, but faced legal challenges from the pool of insurers.

PCC’s enforcement office filed its statement of objections on Dec. 27, 2019, stating that the exclusive agreements resulted in “poor service, unfavorable premium rates, and lack of options to the detriment of the beneficiaries of the MRI coverage.”

The statement of objections is the Enforcement Office’s complaint against the respondents, which will be heard and decided by the PCC.

Under the PCA, entities may face an administrative fine of up to P100 million if found to have entered into anti-competitive agreements. — Jenina P. Ibañez