Liberty vs Discovery
  • Discovery is trying to stop Liberty from using Vitality status as a measurement in its life insurance business.
  • Liberty has hit back hard, saying Discovery sells life policies mostly because it hooks customers with free movie tickets and similar benefits.
  • And that, Liberty claims, is not legal under anti-inducement rules for long-term insurance.
  • Discovery vociferously disagrees – and says insurers should compete on price and benefits.
  • For more stories go to the Business Insider South Africa homepage.

The Discovery group crosses a legal line by offering freebies such as coffee and movie tickets – though Discovery Vitality – to people who sign up for long-term insurance policies with Discovery Life, competitor Liberty Group alleges in new court papers.

And Discovery has itself admitted as much under oath, Liberty says.

But Discovery says there is nothing wrong with the way it rewards people for being healthier, and that Liberty is just trying to distract from its own unlawful behaviour.

The slugging match between the two giant listed companies is playing out in papers before the high court in Johannesburg, where Discovery is challenging Liberty's use of their shared clients' Vitality status in its own incentive scheme. 

The same battle has also seen Liberty allege that Discovery bullied Ster Kinekor and Virgin Active to keep competition to its huge Vitality programme at bay. 

See also: Discovery Vitality stopped it giving away R500,000 in free Ster-Kinekor movie tickets per month, Liberty says – and Virgin Active was bullied too

In responding to Discovery's claim – that Liberty is unlawfully riding on the coat-tails of Vitality – Liberty says it is in fact Discovery that is breaking the law.

Liberty claims that Discovery Life's "success flows, primarily, from the inducements offered to Vitality members by Discovery Vitality", a related but separate company, "in the form of gym memberships, reduced travel costs, free movies and coffees, and the like".

That, Liberty says, is in breach of the Long-Term Insurance Act, which forbids any inducement to enter into a long-term insurance policy, in provisions linked to consumer protection.

Liberty claims that Discovery Life "crosses the inducement line" by marketing its life policies with reference to Vitality, and its discounts and feebies.

An affidavit that Discovery put up to launch its legal challenge, Liberty says, effectively admits that it is breaking the law.

Discovery on Friday told Business Insider South Africa it could not respond in detail to Liberty because the allegations are part of a court case where pleadings are still open.

But Discovery accused Liberty of diverting from its own unlawful competition by raising such issues, and said it objects to the allegation of unlawful inducement.

"Discovery Vitality has been operating its wellness and rewards programme for many years. Members have to pay monthly contributions to Discovery Vitality to participate in the Discovery Vitality programme and if a member engages in the programme the member will become healthier," said Hylton Kallner CEO of Discovery Life. 

"While having a higher Discovery Vitality status may lead to a member obtaining a more affordable life insurance policy or greater cash backs in terms of their life policy, such benefits can never be seen as an “unlawful inducement” in terms of the insurance legislation – insurance companies can and should compete on price and benefits. 

"Discovery Life integrates with Discovery Vitality on the basis of risk-reduction, in terms of proven actuarial modelling to allow Discovery Life to reward policyholders who are healthier and accordingly lower risk."

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