Regulators urge better control of insurance industry

Financial regulators yesterday urged insurers to exercise self-discipline and refraining from business malpractice that infringes upon rights of consumers.

Regulators made the call after David Jou (周國端), chairman of the Insurance Institute of the ROC, called on the insurers to conduct reform measures in order to stop "ripping off consumers."

There are five typical types of malpractice that insurers here have used to cheat consumers, a Chinese-language newspaper reported yesterday, citing Jou.

Mark Wei (魏寶生), director general of the Insurance Bureau under the Financial Supervisory Commission, yesterday stressed the importance of self-discipline, adding that it will also come up with measures to address malpractice in the insurance industry.

Both Jou and Wei's comments came as New York Attorney General Eliot Spitzer is investigating the largest US insurance brokerage, Marsh & McLennan Companies Inc, which he has accused of bid-rigging and price-fixing.

In the newspaper report, Jou accused insurance brokers of manipulating prices while taking advantage of their financial expertise to gull innocent customers into buying investment-linked products out of greed.

Jou also questioned the impartiality of insurance adjusters, who he said are responsible for assessing claims for the insured, yet charge insurers for their services.

What also concerns Jou is the auto insurance controversy, the report said.

According to Jou, auto dealers have monopolized the auto insurance market for over 15 years. But insurers have found it increasingly difficult to make a profit because dealers ask for high commissions from insurers, but also big discounts, Jou said.

Jou also complained about a hike in insurance commissions, saying the move could pose a threat to the industry's development, while an array of life insurance products that put customers in a vulnerable position have been launched in the market.

Frank Ling (凌氤寶), a top policymaker at the commission, said yesterday that he agrees with Jou and will make an effort to address the industry's plight.

According to Ling, the commission is mulling measures that would facilitate a healthier environment in which local insurers can develop.

"We hope to hammer out concrete measures by the year's end," Ling told a press conference.

The measures being studied include revisions to insurance laws, reinforcement of corporate governance principles for insurers and the establishment of asset management models, Ling said.

Wei said that his bureau will also make efforts to facilitate an impartial, more transparent mechanism for the calculation of reasonable insurance premiums.