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Four Japanese Insurers Penalize Officials Over Price-Fixing Scandal

 |  June 17, 2024

Four major Japanese insurers have announced punitive measures against 132 officials implicated in a price-fixing scandal involving insurance contracts for corporate clients. The actions mark a stern response to allegations of anti-competitive behavior and misconduct within the insurance sector.

The affected insurers — Tokio Marine & Nichido Fire Insurance, Sompo Japan Insurance, Mitsui Sumitomo Insurance, and Aioi Nissay Dowa Insurance — have all submitted comprehensive business improvement plans to the Financial Services Agency (FSA) as part of their efforts to rectify the situation.

Tokio Marine & Nichido Fire Insurance disclosed that 55 officials, including President Shinichi Hirose, will face pay cuts, with President Hirose enduring a 50% reduction in monthly remuneration for three months. Two executives from its parent company, Tokio Marine Holdings, will also see their pay diminished.

Sompo Japan Insurance has opted to impose penalties on 49 individuals, including senior officials of its parent entity, Sompo Holdings, not only for their involvement in the price-fixing but also in a separate scandal related to automobile insurance fraud at Bigmotor. Chairman Kengo Sakurada will personally undergo a 50% monthly pay cut for a duration of six months.

Mitsui Sumitomo Insurance announced sanctions against 14 individuals, with President Shinichiro Funabiki enduring a 50% monthly pay reduction for three months. Meanwhile, at Aioi Nissay Dowa Insurance, President Keisuke Niiro and 11 others are also slated for disciplinary actions.

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The insurers’ business improvement plans outline substantial reforms, including the divestment of all strategic shareholdings in client companies, citing concerns that such holdings could compromise fair competition. Additionally, they have committed to ceasing non-insurance-related business assistance to clients, a practice identified as potentially distorting fair competition dynamics.

The scandal itself involved collusion among the insurers, who exchanged sensitive information to maintain market shares and stabilize insurance premium levels. The FSA, which intervened last December by issuing business improvement orders, emphasized that the insurers’ extensive cross-shareholdings were central to fostering an environment conducive to such misconduct.

As of March last year, the four companies collectively held ¥6.5 trillion in strategic shareholdings, prompting regulatory scrutiny over their potential impact on market fairness.

Source: Japan Times