Agency Hands Insurers Fines For Collusion

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Agency Hands Insurers Fines For Collusion

The Fair Trade Commission on Friday slapped fines on 11 automobile insurance companies for rigging insurance premiums. The companies immediately protested the decision, saying they were merely following Financial Supervisory Service orders.

The antitrust agency levied a combined fine of 5.1 billion won ($4 million) against the insurers for colluding on a premium increase last August.

Though the Financial Supervisory Service liberalized a portion of insurance premiums April 2000, it recommended then that the premiums be maintained for the time being. In August, the 11 companies requested an increase averaging 5.4 percent; the regulatory agency approved an increase of just 3.8 percent, and the firms complied.

But the antitrust agency launched rate-fixing investigations after the hike on grounds that the companies were maintaining the rates at a similar level despite the rate liberalization.

The antitrust agency said it obtained evidence that the firms met to consult on the rate increase and agreed that none of them would raise rates by less than the 3.8 percent hike allowed by the financial service. The agency said the agreement amounts to collusion.

The companies penalized are the major companies in the fire and hazard insurance sector, which also sell car insurance, including Samsung, Hyundai, LG, Kukje Hwajae, Oriental, Daehan, Regent and Dongbu.

The antitrust agency questioned the validity of the financial regulator's guideline, which, it said, lacks a legal basis. "We will continue to go after collusive actions that are against fair competition," said an official at the Fair Trade Commission, "even if they are based on government agency guidelines but not on legal provisions."



by Lee Sang-ryeul

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