Info Leak Incidents: When Will Nonlife Insurance Industry Break Away from Wrongful Practices?

Editorial

14:59 JST, September 17, 2024

Once again, it has been discovered that inappropriate practices have spread among major nonlife insurance companies. When will they be able to break away from wrongful practices? The companies must reflect deeply and this time eliminate misconduct once and for all.

At the end of last month, four major nonlife insurance companies — Tokio Marine & Nichido Fire Insurance Co., Sompo Japan Insurance Inc., Mitsui Sumitomo Insurance Co. and Aioi Nissay Dowa Insurance Co. — submitted reports to the Financial Services Agency regarding information leaks. The total number of leaks is said to have amounted to around 2.5 million.

The information leaks were discovered through internal inspections by the nonlife insurance companies, and in July the FSA requested them to submit reports on the incidents based on the Law on the Protection of Personal Information and the Insurance Business Law. It is surprising that leaks were that rampant.

The leaks primarily occurred through nonlife insurance agents involved in other businesses such as auto dealerships, accounting for over 90% of the total. Employees of these agents sent policyholders’ personal information, such as policy numbers and insurance premiums, to other nonlife insurance companies via email, even though the policyholders had not taken out insurance with those companies.

There was also an atmosphere at the nonlife insurance companies that tended to take such information-sharing for granted as a long-standing practice. Their awareness of the need to manage personal information was far too lax.

What is even more serious is the leakage of information through the remaining nearly 10% of nonlife insurance agents who are affiliated with such institutions as banks.

Nonlife insurance company employees on loan to insurance agents took out information on policyholders at other nonlife insurance companies and passed it to the nonlife insurance company they were dispatched from.

Nonlife insurance companies have a responsibility to recommend insurance products with the benefit of policyholders in mind. However, there are also cases where information has been used to encourage policyholders to switch to policies that are more beneficial for the company. If this has distorted fair competition, it may be a violation of the Unfair Competition Prevention Law.

At Tokio Marine & Nichido and Sompo Japan, information was reportedly leaked at the request of the company from which an agent was loaned. It is necessary to investigate whether the leaks were conducted systematically.

At the end of last year, the four nonlife insurance companies received administrative punishments from the FSA on the grounds that they arranged insurance premiums in advance for corporate insurance policies.

Sompo Japan and other companies received business improvement orders in January this year related to fraudulent insurance claims by leading used car sales company Bigmotor Co.

The recent spate of problems was caused by the growing oligopoly among major nonlife insurance companies. This is probably because management is increasingly prioritizing market share and there are more opportunities for information exchange among employees of nonlife insurance companies, such as occasions when employees are loaned to insurance agencies, leading to collusion.

In response to a series of scandals involving nonlife insurance companies, the FSA compiled a report in late June on reform measures for the industry. In light of the fact that another inappropriate case has occurred, the agency should deal with it strictly and also reconsider how it should supervise the industry.

(From The Yomiuri Shimbun, Sept. 17, 2024)