- Politics & Government
Japan FTC Inspects 4 Nonlife Insurers over Premiums Cartel
10:34 JST, December 20, 2023
TOKYO (Jiji Press) — Japan’s Fair Trade Commission conducted on-site inspections of four major nonlife insurers Tuesday over an alleged cartel to prearrange premiums for joint insurance contracts with corporate and public entities.
Twenty-two locations including the head offices of Tokio Marine & Nichido Fire Insurance Co., Sompo Japan Insurance Inc., Mitsui Sumitomo Insurance Co. and Aioi Nissay Dowa Insurance Co. were inspected on suspicion of forming the cartel in violation of the antimonopoly law. Two insurance agencies were also inspected.
The antimonopoly watchdog, which had asked the insurers to voluntarily submit related documents, seems to have judged that it needs to use its legal authority to bring the whole truth to light. It will consider taking administrative measures such as issuing a cease and desist order and imposing surcharges.
The investigations initially focused on joint insurance contracts with railway and real estate group Tokyu Corp. and Sendai International Airport Co.
The range of the probes has been widened to cover contracts with six other institutions — the Tokyo metropolitan government, Cosmo Oil Co., the Japan Organization for Metals and Energy Security, or JOGMEC, energy company Jera Co., electronics maker Sharp Corp. and Keisei Electric Railway Co.
Joint insurance policies are offered by groups of insurers that hope to diversify risks arising from benefit payments. The four companies dominate the country’s joint insurance market.
The cartel began to affect joint insurance contracts with the six institutions between 2013 and 2020, or earlier. The annual premiums paid for a contract are believed to be between around ¥500 million and ¥8 billion.
The FTC is expected to investigate whether there was an organizational involvement in the cartel, given that officials in managerial posts are suspected of being involved in the prearrangement of automobile insurance premiums for official vehicles of the Tokyo metropolitan government.
The cartel came to light following a complaint from a client company in December last year.
Internal investigations by the four insurers have found similar inappropriate practices related to contracts with over 100 client companies.
The Financial Services Agency is expected to order the insurers to improve their business practices.
Sources said that major nonlife insurers keep incurring losses on their corporate insurance services because they pay far more benefits than premiums they receive under contracts to insure against damage, such as from a factory suspension.
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