SEJONG (Yonhap News) ― South Korea’s antitrust watchdog said Thursday that it has fined nine life insurers a combined 20.14 billion won ($18.06 million) for colluding to fix commission rates.
The nine are Samsung Life Insurance, Kyobo Life Insurance, Hanwha Life Insurance, Shinhan Life, MetLife, Prudential Life Insurance, ING Life Insurance, AIA and Allianz Life Insurance, according to the Fair Trade Commission.
The watchdog found that they colluded to fix commission rates by setting the minimum amount of benefits for their variable insurance products that customers are guaranteed to receive when they reach eligible ages or conditions.
Variable insurance is a type of insurance product whose benefits could differ based on investment returns. The minimum benefits are guaranteed to ease worries that the amount that customers receive could plunge when investments go awry.
In return for setting the guaranteed minimum benefit, insurers charge their customers commissions.
“The rates are one of the important factors that customers take into account when choosing what insurance products they will purchase. They should be determined through free competition among market players,” the FTC said in a press release.
In 2001, Samsung Life, Hanwha Life, Kyobo Life and Prudential were found to have been involved in fixing the rates for variable insurance products. In 2002, all of the nine cited companies were engaged in similar practices.
Samsung Life was slapped with 7.39 billion won in fines, the largest of all, followed by Hanwha Life with 7.12 billion won.
Kyobo Life and MetLife were fined 4.09 billion won and 874 million won, respectively, the FTC said.
Of them, the watchdog said that it will refer five companies ― Samsung, Kyobo, Hanwha, Shinhan and MetLife ― to prosecutors for further investigation.
