The Financial Supervisory Commission yesterday fined Nan Shan Life Insurance Co (南山人壽) NT$30 million (US$966,651) for its failure to solve the problems of its “Envision Project” information techonolgy system, the highest-ever fine levied in a single case.
The system has caused problems with about 152,000 policies sold by the company, Insurance Bureau Director-General Shih Chiung-hwa (施瓊華) told a news conference in New Taipei City, with some policies automatically being suspended or halted.
Nan Shan Life has contacted about 150,000 affected policyholders and has promised the commission that it would compensate its clients as soon as possible, Shih said.
Even so, the commission has barred the company from selling any new investment-linked policy (ILP) products until it has fixed the problems and has passed an examination by an independent third party, Shih said.
The net value of the investments linked to Nan Shan Life’s ILP products was NT$180.9 billion as of the end of June, she said.
The penalty needed to be severe enough for the company to improve the system and bring its customer service levels back to normal, she added.
In addition, the commission suspended Nan Shan Life chairman Du Ying-tzyong (杜英宗) from being chairman or a board member of the company for two years and banned him from receiving any salary or benefits during the period.
Du, who has been chairman since Aug. 13, 2015, was responsible for introducing the Envision Project after he commissioned German software company SAP SE to install the NT$4.7 billion system in 2014 when he served as deputy chairman, the commission said.
However, Du failed to supervise, get external opinions or reassess the risks of the project, which led to the budget ballooning to NT$10.1 billion, the commission said.
Nan Shan also did not conduct parallel testing before launching the Envision Project in September last year, which was one of the reasons the company failed to identify and fix the glitches, the commission added.
The commission also demanded that the insurer cut the salary of a former chief auditor surnamed Yang (楊) by 30 percent and barred him from acting as chief auditor for the next three years.
The company must submit a plan to improve the system and and timetable for fixing all the existing problems, Shih said.
Nan Shan Life said in a statement that it would respect the commission’s decisions and would fix the system as soon as possible.
The commission also fined Nan Shan Insurance Co Ltd (南山產險) NT$6 million for its failure to assess the risk of implementing the new system.
The fine is much smaller than that handed to Nan Shan Life as the problems did not adversely affect the company’s policyholders, the commission said.
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