Four Japanese insurers are punishing officials over a price-fixing scandal

Four major Japanese insurers have announced punitive measures against 132 officials involved in a pricing scandal involving insurance contracts for corporate clients. These actions are a tough response to allegations of anti-competitive behavior and inappropriate behavior in the insurance sector.

The affected insurers – Tokio Marine & Nichido Fire Insurance, Sompo Japan Insurance, Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance – have submitted comprehensive business improvement plans to the Financial Services Agency (FSA) as part of their efforts to remedy the situation.

Tokio Marine and Nichido fire insurance revealed that 55 officials, including President Shinichi Hirose, will face pay cuts, with President Hirose having to endure a 50% cut in monthly salary for three months. Two directors of the parent company, Tokio Marine Holdings, will also have their pay reduced.

Sompo Japan insurance has decided to fine 49 people, including senior officials of its parent, Sompo Holdings, not only for their involvement in price fixing but also in a separate auto insurance fraud scandal at Bigmotor. CEO Kengo Sakurada will personally take a 50% reduction in his monthly salary for a period of six months.

Mitsui Sumitomo insurance announced sanctions against 14 people, and President Shinichiro Funabiki agreed to a 50% monthly salary cut for three months. Meanwhile, at Aioi Nissay Dowa InsurancePresident Keisuke Niiro and 11 others will also face disciplinary action.

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Insurers’ business improvement plans include significant reforms, including the divestment of all strategic stakes in client companies, citing concerns that such stakes could threaten fair competition. Additionally, they have committed to ending non-insurance-related business assistance to customers, a practice identified as potentially disrupting fair competition dynamics.

The scandal itself concerned collusion between insurers who exchanged sensitive information in order to maintain market shares and stabilize insurance premium levels. The FSA, which intervened in December last year to issue streamlining orders, highlighted that insurers’ extensive cross-interests were crucial in creating an environment conducive to this type of misconduct.

As of March last year, the four companies held a combined strategic stake of 6.5 trillion yen, prompting regulators to investigate their potential impact on market fairness.