Four Major Non-Life Insurers Receive FSA Sanctions

Four key non-life insurance companies have been served with business improvement orders by the Financial Services Agency (FSA) due to infringements of the anti-monopoly and fair trade rules with regard to the setting of commercial insurance payments, plus other managerial shortcomings. These companies are Aioi Nissay Dowa General Insurance, Sompo Japan Insurance, Tokio Marine & Nichido Fire Insurance, and Mitsui Sumitomo Insurance. The FSA demonstrates the alteration in the competitive atmosphere in the past 25 years and how the attention on compliance has changed as a result of responses to numerous violations like this: Starting in 1998, changes to the Act of 1949 Concerning Non-Life Insurance Premium Rating Organizations saw a liberalization of insurance rates, resulting in increased competition based on reduced premiums in the non-life insurance market. In addition, the Fair Trade Commission gave a warning to the Japan General Insurance Association in October 1994 concerning a possible cartel involving repair fees for auto insurance, and to the Japan Machinery Insurance Federation in December 1996. In light of issues regarding the Antimonopoly Act, such as exclusion recommendations, the companies that were part of the three major non-life insurance groups prior to merging have established dedicated organizations to ensure compliance with the Act. These organizations are responsible for designing guidelines, as well as conducting training programs. Over time, the organization solely devoted to antitrust law compliance had to be merged with the compliance department due to the occurrence of insurance claim payment omissions in 2005, and after the revised Insurance Business Law was established in 2016. Therefore, the measures taken by each company to stay in agreement with the Antimonopoly Act have been weakened, for example, the Antimonopoly Act-related training materials are now included in relevant laws and regulations, while references to the Antimonopoly Act itself have been removed. Since the turn of the century, the number of substantial enterprises has dwindled due to non-life insurance company mergers, leading to an increase in the opportunities of interaction between the limited amount of sales representatives. Since the late 2010s, the non-life insurance industry has been facing large deficits in fire insurance caused by the frequency and gravity of natural disasters. For this reason, major non-life insurers have changed their priority from insurance premium income to profit, or have taken more action to better their bottom line. Thus, it is believed that there have been an abundance of debates when revising insurance contracts, particularly when it comes to escalating insurance premiums or reducing coverage, which likely leads to disputes between policyholders and insurers. Additionally, the number of new commercial insurance contracts is dwindling, meaning it can be challenging to make up for diminished renewal contracts and lost market share through gaining new contracts. This has created a situation where the pressure to succeed is becoming increasingly intense year after year. The development of these environmental shifts has caused an impetus among insurance underwriters to adjust premiums ahead of time in order to minimize negotiations with policyholders, particularly when it comes to coinsurance. A summary of the administrative actions taken by the FSA, as published by MS&AD Insurance Group, with Aioi Nissay Dowa Insurance as its subsidiary, was released by the FSA with no distinction made between the four companies, suggesting that the sanctions are likely to be consistent. In order to guarantee the proper running of operations, the following must be put into practice. Submit and execute the plan related to (1) by February 29, 2024. Report the review status by the end of January 2024. Progress reports should occur every three months, no later than the 15th of the following month, and will continue until the plan is finished (Initial report due end of May 2024). Provide a report on the results of the examination regarding the second point outlined in (1) prior to February 29, 2024. The conclusions of the FSA's survey of the four insurance companies pointed to discrepancies in the collusions discovered and the organization anticipates the potential revelation of additional wrongdoings, if not already seen in the varieties of infringements. Be part of our Tokyo FinTech Publication by reading the posts from our writers - just like hundreds of readers already do every day. Don't forget to register for the "Japan FinTech Observer" and get the latest updates weekly through either Medium or LinkedIn. Whether you reside in Tokyo, or are simply traveling through, we invite you to join our Tokyo FinTech Meetup. Additionally, you are more than welcome to explore our YouTube channel and LinkedIn page.

Source: https://medium.com/tokyo-fintech/fsa-sanctions-four-major-non-life-insurers-f7c2c2438a87?source=rss------fintech-5