Non-Life Insurance Association of the ROC

Case:

Key Words:

consent, property insurance market

Reference:

Fair Trade Commission Decision of January 25, 2007 (the 794th Commissioners' Meeting); Disposition (96) Kung Ch'u Tzu No. 096021

Industry:

Property and Liability Insurance (6520)

Relevant Laws:

Article 14(1) of the Fair Trade Law

Summary:

1. In order to promote the liberalization of premiums in the property insurance market and to safeguard the insurer's rights and interests, the Financial Supervisory Commission, Executive Yuan (hereinafter called the "FSC"), enacted the "Premium Liberalization of the Property Insurance Market Plan" (hereinafter called the "Plan"). The content of the second stage of the said Plan was to promote the modification of commercial fire insurance and type A car damage insurance, type B car damage insurance, collision insurance without deductibles, car theft insurance, and third-party liability insurance in terms of "physical injury" and "monetary loss" and to adjust the hazard premium for any car insurance within 5%. However, the NLIA claimed that "maintaining current premium rates is the common acknowledgement of the industry for pursuing order and stability", and requested its members not to submit an application for the premium liberalization with the FSC regarding the premium rates for automobile insurance via the memorandums, meeting minutes of the Board of Directors, and emails. This kind of act might affect the consumer's rights and interests.
2. Findings of FTC after investigation: The FSC sent a letter on March 30, 2005 to request that the NLIA inform its members to apply for premium liberalization regarding any automobile insurance. The FSC additionally sent a letter on July 8, 2005 to request that the NLIA inform its members to truthfully comply with the letter issued by the Taiwan Insurance Institute on June 30, 2005. The said letter of the Taiwan Insurance Institute stated that the deadline for the modification of the hazard insurance premium of any automobile insurance and the application for review was the 15th day of August each year, and that, with the approval of the Insurance Bureau of the FSC, the hazard insurance premium may be adjusted in the following year. However, during the 10th meeting of the 3rd Board of Directors of the NLIA on July 28, 2005, the Automobile Insurance Commission reported that, "upon the discussion of the Automobile Insurance Commission…for the implementation of the second stage of the premium liberalization, the premium modification will be applied after the completion of the adjustment calculation." The Board of Directors passed a resolution stating "to be consulted" and mailed the meeting minutes as Letter (94) Chan-Tzong-Tzu No. 099 of August 2, 2005 to its members. It was also found that according to the "memorandum" and "attachment" attached to the email transmitted by the "Compulsory Automobile Liability Insurance Pool" respectively on July 25, 2005 and August 4, 2005, the common acknowledgement of the industry for pursuing order and stability and maintaining current premium rates was formed during 2005 through the meetings of the Automobile Insurance Commission of the NLIA.
3. Grounds for disposition: The NLIA employed the agreement of the Automobile Insurance Commission and the decision of the Board of Directors to restrain hazard insurance premiums from being lowered and requested its members to comply accordingly. It can be proved that a "mutual consent" of concerted action existed then. Externally, none of the members applied for automobile insurance premium liberalization during 2005. As a result, it can be determined that the consent of the NLIA to maintain premium rates restrained the freedom of its members to decide on the prices and affected the supply and demand of product trade or services in violation of Article 14(1) of the Fair Trade Law.

Appendix:
Non-Life Insurance Association of the ROC

Summarized by Chi, Hsuen-Li; Supervised by Chen, Yuhn-Shan