Japan's financial watchdog on Tuesday ordered four major property insurers to improve their business operations after finding they colluded to set inflated insurance premiums for corporate customers and government agencies.
Japan's major insurers have not been subject to collective administrative punishment from the country's regulator for 16 years. The last time was when a group of firms was penalized for not properly paying out insurance claims to customers in 2007.
The four companies are accused of colluding to inflate the baseline insurance premium charged to customers, the Financial Services Agency said.
Japanese Finance Minister Shunichi Suzuki criticized a lack of compliance in the industry and condemned the companies' conduct at a press conference, saying, "It is extremely malicious."
The four companies in question are Tokio Marine & Nichido Fire Insurance Co., Sompo Japan Insurance Inc., Mitsui Sumitomo Insurance Co. and Aioi Nissay Dowa Insurance Co.
In the order, the regulator demanded the companies clarify to what degree their management is responsible for the breach and execute drastic reforms to improve compliance.
The scandal revolved around a type of insurance multiple insurers jointly underwrite. Insurance firms typically provide shared coverage for large customers such as big corporations to protect against incurring potentially large compensation claims individually.
