Companies fined for colluding over insurance fee hike

The Ministry of Industry and Trade’s Competition Council has fined 19 insurance companies for violating the Competition Law by colluding with each other to increase insurance fees for motor vehicles.

Bach Van Mung, head of the ministry’s Competition Department, said following the department’s investigation result and the decision of the Competition Council last Thursday, the 19 companies were each fined 0.025 per cent of their total revenue in 2007.

This would have the companies paying a total of VND1.7 billion (US$90,000).

On September 15, 2008, 15 of the 19 insurance companies signed an agreement and raised motor vehicle insurance fees from 1.3 per cent to 1.56 per cent of their retail value. On October 1, 2008, the other four firms joined the pact.

According to complaints by customers and other insurance companies, the 19 companies had co-operated to undermine competition from other companies.

The ministry’s Competition Department in November 2008 decided to investigate these complaints and concluded that they were true.

“Of 25 insurance companies operating in motor vehicle insurance sector at that time, the 19 companies had 99.79 per cent of the country’s market share. So, the agreement violated the Competition Law,” Mung said.

Dinh Trung Tung, a representative of the Competition Council, said the agreement had negatively impacted the motor vehicle insurance market.

Do Gia Phan, chairman of the Viet Nam Standards and Consumers Association, said customers who were directly affected by the agreement have the right to demand compensation.

The Competition Department also needed to specify clearly the impact of the agreement on the customers, Phan said.

Tags: Vietnam insurance, Vietnam insurance industry, Vietnam insurance market