Japan’s Financial Services Agency (FSA) has ordered four major non-life insurance companies to expedite the sale of cross-held shares, reported Jiji Press, citing sources.
This directive follows the discovery of rigged insurance premiums for corporate clients, which may have distorted competition.
As per the report, the FSA suspects that maintaining good relations through shareholding in client companies could have undermined the competitive environment.
In December 2023, the financial services watchdog issued business improvement orders to Tokio Marine & Nichido Fire Insurance, Sompo Japan Insurance, Mitsui Sumitomo Insurance, and Aioi Nissay Dowa Insurance.
As reported by The Japan News at the time, the insurers acknowledged in their reports to the FSA that their officials had exchanged information on insurance premiums and engaged in other illegal practices for contracts with more than 100 companies.
The four insurers had issued statements indicating that they will strive to rebuild trust and that they take the government directive seriously, reported Reuters.
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They were accused of pre-setting premiums for corporate clients before bidding, with an unspoken rule to decide contract winners based on cross-held shares rather than service quality.
As of the end of March 2023, the combined value of cross-shareholdings by these companies was approximately Y6tn ($40.23bn).
They are expected to include strategies to accelerate the sale of these shares in their business improvement plans, which are due for submission to the FSA by the end of the month.
In other Japanese insurance industry news, life insurer Dai-ichi Life reached an agreement last week to acquire the healthcare platform Benefit One from Pasona Group.
This acquisition aims to diversify Dai-ichi Life’s business beyond traditional insurance and provide customised insurance packages to Benefit One’s members, tailored to their family structures and age groups.