White insurance firms said to be biased against black car repair businesses

White-owned insurance companies were accused of discriminating against black-owned towing and vehicle repair enterprises, on Wednesday.

The allegation was made in a submission by five industry associations, during public hearings in Parliament on transformation of the financial services sector.

The associations were the South African Towing Board, the South African Auto Repairer and Salvage Association, the Western Cape Towing Association, the South African Building Contractors and Civils Association (SABCCA) and the Retail Automotive Aftermarket Federation.

The hearings were jointly held by the finance committee, and the trade and industry committee.

Speaking on behalf of the associations, SABCCA representative Wesley Douglas said they objected to the South African Insurance Association presenting itself as an agent of change and transformation when it was only concerned about the interests of its members, who discriminated against black towers and panel beaters and construction and building workers.

Douglas said white monopolistic insurance companies were complicit in "uncompetitive and racially discriminatory and exclusionary procurement practices". White monopolies excluded black service providers, Douglas said.

He estimated that the annual procurement by the short-term insurance industry was worth about R95bn, of which only about R1.5bn went to black tow truckers, panel beaters and contractors. The insurance companies outsourced their procurement to white monopolies in these sectors, which in turn gave all the work to white members, he said.

"… Insurance companies flagrantly disregard the broad-based black economic empowerment imperative, and have actively worked against black small-, medium-and micro-sized enterprises in favour of white monopolies run by white call centres and facilitated by white associations," Douglas said.

Barriers to entry were kept high for vehicle repairers to keep black service providers out of the sector. Douglas also cited racially differentiated rates paid and discounts provided to black and white service providers.