Deceptive and Obviously Unfair Acts of Chung Yuan Insurance Agency Co. Ltd.

Chinese Taipei

Case:

Deceptive and Obviously Unfair Acts of Chung Yuan Insurance Agency Co. Ltd.

Key Words:

deceptive acts, unfair acts; insurance solicitation

References:

Fair Trade Commission Decision of May 3, 1997 (the 186th Commission Meeting); Disposition (84)-Kung-Chu-051 given by Fair Trade Commission

Industry:

Insurance (6030)

Relevant Laws:

Article 24 of the Fair Trade Law

Summary:

1. Chung Yuan Insurance Agency Co. Ltd. (hereinafter referred as to "Chung Yuan") was found to have been regularly posting personnel recruitment advertisements in newspapers. Some of such advertisements even failed to identify the name of the insurance agency posting such advertisements. The applicants were first given a training for the first two days and a presentation of the company's operation in the morning of the third day. Thereafter, the applicants were required by the Company that each of them must successfully establish an insurance case either by selling an insurance policy to a third party or by buying one himself/herself before he/she could sign a trial-period contract with, and become a reserve staff of, the company. These facts have been frankly admitted by Chung Yuan without reservation, and may be further proved by the undertaking and return receipt signed at the date of, and attached to, the trial-period contract.

2. Article 3 of the "Rules Governing Insurance Solicitors", which was promulgated pursuant to Article 177 of the Insurance Law, an insurance solicitor may not practice without a registration certificate. With respect to the issue of whether Chung Yuan's recruitment of reserve staff for trainees was in violation of the Insurance Law and relevant regulations, the Ministry of Finance stated, in its letter in reply to this Commission, that the act of recruiting unregistered persons for practical trainees who engage in insurance solicitation for remuneration was an act against Article 3 of the Rules. However, if the reserve staff merely did trainee works with registered insurance solicitors, such works were not prohibited by any existing insurance related laws or regulations. In the present case, none of the applicants responding to Chung Yuan's recruiting advertisements was a registered insurance solicitor qualified for conducting insurance solicitations.

On the other hand, Chung Yuan required that an applicant must successfully establish an insurance case either by selling an insurance policy to a third party or by buying one himself/herself before he/she could sign a trial-period contract with, and become a reserve staff of, the company. Since the sale of insurance policy had nothing to do with the trainees if they were merely observing, and since under the time pressure most applicants had elected to buy insurance policies themselves or sell to their relatives, it may be concluded that Chung Yuan have fraudulently recruited staff for the purpose of soliciting insurance business. These acts were deceptive and obviously unfair; they were against social ethics; and they restricted efficiency competition in the insurance market. Chung Yuan's acts were in violation of Article 24 of the Fair Trade Law. After having investigated and discussed the present case, this Commission adopted a resolution at its 186th meeting requiring that Chung Yuan cease its deceptive or obviously unfair acts upon the service of this Commission's disposition.

Summarized by Yeh, Tien Fu
Supervised by Tso, Tien Liang

＄: For information of translation, click here

[Browse by APEC Member Economies] [Browse by Subject Categories] [Home]
[Decisions] [Approvals] [Interpretations] [Administrative Guidance]