The Financial Supervisory Commission (FSC) must “exhaustively” examine whether Nan Shan Life Insurance Co (南山人壽) has fixed problems with its new information system, as more policies might have been affected, the Nan Shan labor union said on Wednesday, one day after the commission sanctioned the insurer, including an order to halt sales of investment-linked policies and a fine of NT$30 million (US$968,367).
The commission on Tuesday said that Nan Shan’s Envision Project information system has caused problems with about 152,000 policies, but the union said the number of affected policies should be higher, as many policyholders and sales agents had not checked their products.
“Many investment-linked policies have not expired, so their policyholders have not received the returns and cannot judge whether they should file a complaint,” union executive director Liao Su-zhu (廖素珠) said by telephone.
However, as many investment-linked products have been affected by glitches in Envision Project, the union believes that policies that seem fine now will eventually turn out to be problematic, Liao said.
As those projects are linked to a variety of funds and bonds, some Nan Shan sales agents reported to the company that Envision Project had placed incorrect orders, focused on the wrong targets or traded at the wrong time, which would all reduce returns, she said.
Although it is difficult to estimate the overall number of affected policies, new problems would continue to emerge until the system is fully fixed, she said.
“Punishments should have been imposed earlier to limit the damage. We have been urging the FSC to take action since November last year, but in April it gave Nan Shan a chance to fix the problems and demanded improvements by the end of June,” Liao said.
“That decision has been proved wrong. The FSC should never have given the company time,” she added.
As Nan Shan does not lack money, the fine might not work, but the ban on selling new investment-linked policies should be powerful enough to prompt a change, she said.
The commission ordered Nan Shan to complete improvements of the system within four months, assigning KPMG LLP as an independent assessor, FSC Chairman Wellington Koo (顧立雄) told reporters on the sideline of an event in Taipei on Wednesday.
That means Nan Shan could resume selling investment-linked policies this year, Koo said.
Nan Shan has been pursuing an initial public offering (IPO) on the nation’s Emerging Stock Board, but given the disruptions to business, it is unlikely to gain the commission’s approval in the short term, he said.
Hopefully, the firm would improve its corporate governance with Nan Shan chairman Du Ying-tzyong (杜英宗) suspended for two years as part of the commission’s sanctions.
Nan Shan on Thursday said that its board of directors agreed to appoint Ruentex Group (潤泰集團) chairman Samuel Yin’s (尹衍樑) son Yin Chung-yao (尹崇堯) as acting chairman for two years from yesterday.
The 36-year-old served as Du’s special assistant and has been company director for the past three years, Nan Shan said.
Ruentex Group owns Ruen Chen Investment Holding Co (潤成投資), which has a 89.5 percent stake in Nan Shan, corporate data showed.
The commission said that it would review Yin Chung-yao’s qualifications as it mulls its approval, but said that at least five years of experiences was required for the job.
Despite the disruptions, Nan Shan reported cumulative net profit of NT$34.75 billion for the first eight months of this year, up 56 percent from a year earlier, making it the most profitable life insurer in Taiwan, company data showed.
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