The Financial Services Agency (FSA) of Japan has ordered four major non-life insurers based in the country to report over allegations of the formation of a cartel to adjust fire insurance premiums for a corporate client.
The alleged insurers include Tokio Marine & Nichido Fire, Sompo Japan, Mitsui Sumitomo, and Aioi Nissay Dowa. The FSA issued the order earlier this month, based on the regulations imposed by the insurance business law in the country.
According to a report from Jiji Press, the four major firms were believed to have offered a major private railway group vastly different fire insurance premium rates from past ones. In-house investigations on the matter are currently ongoing. Sources familiar with the scandal pointed to Tokio Marine as the insurer who played a leading role in adjusting the premiums.
Multiple firms working together to offer fire insurance to a single company is part of the norm, as this kind of coverage can pose great risks to insurers. However, the regulation and manipulation of prices by a group is defined as cartel activity, which is illegal across the world.
The resulting fallout from the allegations has caused shares of both Sompo and Tokio Marine to fall. Sompo recorded its biggest one-day loss since late November 2022 as a result of the scandal, while Tokio Marine had its largest one-day loss since mid-March.
Elsewhere in the country, Japan’s NEXI has acquired a stake in African risk solutions provider ATI with a capital injection of US$14.8 million.
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