China Mariner's Assurance Corp. and Fubon Insurance Co., Ltd. were accused of tie-in sales and concerted action when underwriting automobile theft insurance, in violation of the Fair Trade Law
Chinese Taipei
Case:
China Mariner's Assurance Corp. and Fubon Insurance Co., Ltd. were accused of tie-in sales and concerted action when underwriting automobile theft insurance, in violation of the Fair Trade Law
Key Words:
automobile theft insurance, tie-in sales, concerted action
Reference:
Fair Trade Commission Decision of April 17, 2003 (the 597th Commissioners' Meeting); Letter (92) Kung Yi Tzu No. 0920003499
Industry:
Property and Liability Insurance (6420)
Relevant Law:
Summary:
1. In June 2002, the complainant sought to individually purchase an automobile theft insurance policy from both China Mariner's Assurance Corp. (China Mariner's) and Fubon Insurance Co., Ltd. (Fubon), whereupon both companies refused to underwrite a policy on grounds that the complainant refused to also purchase passenger insurance. Furthermore, the complainant understood the insurance companies in question to each be engaged in the exact same tie-in sale practice, leaving consumers with no options, and that the alleged practices were likely violations defined in the Fair Trade Law as “tie-in sales” and concerted action.
2. The Fair Trade Commission (FTC) found that from January through July 2002, China Mariner's and Fubon respectively underwrote 166 and 206 individual automobile theft insurance policies. Numbers of individual automobile theft insurance policies underwritten by other single insurance companies during the same period ranged from just 50 or 60 policies to more than 700, so there is no compelling evidence indicating that that the two insurance companies forced insurance package tie-ins on consumers. Furthermore, ordinary consumers are far better acquainted with automobile insurance relative to other types of insurance (such as maritime insurance, or train-air-truck insurance) and the market is highly competitive. Businesses must actively develop new products and recommend insurance packages suited to the client—for example, new car owners are more likely to value collision and theft insurance whereas owners of older cars are more likely to emphasize liability insurance—to satisfy different market demands. The results of the FTC's inquiry further showed that one of the tactics of sales personnel at some insurance companies was to provide risk analysis and recommendations providing the insured party with more complete coverage, such as recommending that automobile theft and third-party liability insurance be sold as a package or combined with other types of insurance. These types of recommendations or package promotions are a manifestation of the result of market competition. It is difficult to make the finding, based on the above facts, that China Mariner's and Fubon violated the provisions of Article 19(iii) or Article 24 of the Fair Trade Law.
3. As regards whether the two insurance companies engaged in “concerted” tie-in sales, the inquiry showed that even if they used the bundling of automobile theft insurance with other types of insurance as one of their sales tactics, the types of insurance packages offered were not only dissimilar, there was further no other specific evidence indicating that the two companies agreed contractually, by negotiation or by any other means to restrict business activities, and there is thus no likelihood of a violation of the provisions of Article 14 of the Fair Trade Law.
Note: China Mariner's Assurance Corp. has now been acquired by Union Insurance Co. Ltd.
Summarized by Hung, Hsuan; Supervised by Horng, Der-Chang
Appendix:
Fubon Insurance Co.'s Uniform Invoice Number: 70826461