The Financial Supervisory Commission (FSC) on Thursday handed Chang Hwa Commercial Bank (CHB, 彰化銀行) a NT$3 million fine (US$99,430) for unilaterally altering clients’ property insurance policies so clients have to pay higher premiums.
CHB employees at 42 branches were found to have changed 518 fire and earthquake insurance policies to mixed property insurance policies between January and May this year without the clients’ approval, the commission said.
The commission also banned CHB from selling property insurance policies for six months. Consumers in Taiwan are generally required to obtain fire and earthquake insurance to qualify for mortgage loan applications.
Some affected clients lodged complaints with the commission, while most later agreed to the policy change and absorbed the additional premium burdens, the FSC said.
The commission also imposed a fine of NT$1.8 million on Taiwan Fire and Marine Insurance Co (台灣產物保險) for corroboration with CHB in altering the contracts.
Bancassurance, the partnership between banks and insurance companies to sell insurance products through the lenders’ sales channel, has grown into a significant earnings driver for both sides.
In related news, CHB on Thursday issued a statement to address media reports that it is in talks to acquire Jih Sun Financial Holding Co (日盛金控) through a cash and share swap deal.
CHB chairman Chang Ming-daw (張明道) reportedly steered the acquisition assessment and reached out to major shareholders at Jih Sun Financial, whose shares have fallen below their net worth.
CHB might finance the deal through a share swap scheme or limit cash to 50 percent, if necessary, reports said.
“The reports are totally fabricated,” CHB said in a statement.
With 185 branches in Taiwan and 11 overseas outlets, CHB has sought to expand its scale and maximize interests of all shareholders and is contemplating options to grow into a financial holding company to achieve the goal.
In Taipei trading on Friday, shares in CHB dropped 0.3 percent to NT$16.2, while Jih Sun Financial closed up 2.04 percent to NT$8.5.
This year, shares in CHB have dropped 5.25 percent, bucking a 5.56 percent rise for the banking sector and compared with the TAIEX’s 15.98 percent advancement.
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