The FSC on 24 November 2020 imposed an administrative fine of NT$3 million on BNP Paribas Cardif TCB Life Insurance after discovering that the company, in its conduct of insurance business, had violated Paragraph 2, Article 148-3 of the “Insurance Act” in a manner that showed a likelihood of improper management. The amount of the fine was set in accordance with Paragraph 5, Article 171-1 of the “Insurance Act.” In addition, the FSC issued the company four official reprimands in accordance with Paragraph 1, Article 149 of the same Act. The details of the violations are as follows:
1. Where a single bank employee has handled policy loans and the purchases of new insurance policies, during the process of making the policy loans and underwriting the insurance policies, the insurer has simply believed the bank employee’s solicitation reports and the customer’s statements that deposits, salary, or bonuses were the sources of funds used for the transactions, and failed to discover through investigation that the customer had actually used the proceeds of policy loans to pay the premiums. On four separate occasions, the customer had used a policy loan to then purchase an investment-linked policy, but the insurer failed to confirm that the customer was aware of the related risks, failed to properly evaluate the customer’s needs or product suitability, and failed to properly require the solicitation channel and its employee to maintain legal compliance or establish related monitoring and control mechanisms.
2. In telemarketing products to persons with physical or mental disabilities, and in providing notifications of refusal to underwrite, where applicants had a Disabled Person Certificate or had a health problem (e.g. blindness in both eyes) that would qualify them to obtain a Disabled Person Certificate, the insurer has treated these facts as grounds for refusal to underwrite an application for products such as cancer insurance or life insurance, and failed to evaluate the possibility of using an alteration note to underwrite a policy while excluding certain types of coverage.
3. In exercising quality control on the solicitation practices of brokerage and agency channels, with respect to complaints that the sales agent who handled the signing of policy applications or that two or more sales agents jointly handled such signings, the insurer failed to clearly understand the appropriateness of the solicitation process or to carry out follow-up investigations. The insurer failed to properly look into complaints or carry out follow-up handling procedures. Also, the aforementioned solicitation disputes, poor management of solicitors, and poor legal compliance have not been factored by the insurer into its performance reviews.
4. In a number of areas, the insurer has shortcomings that could undermine the soundness of its business operations. Such problem areas include the following: the setting of insurance product commissions and bonuses; sales methods; solicitation and underwriting procedures for travel accident insurance; pre-launch product review mechanisms for investment-linked insurance policies, and post-sale periodic reviews of the investment instruments to which such policies are linked; and management of cybersecurity operations.
As for Taiwan Cooperative Bank, the FSC imposed an administrative fine of NT$1.8 million in accordance with Subparagraph 2, Paragraph 1, Article 30-1 of the “Financial Consumer Protection Act” due to the following shortcomings: consumers used the proceeds of policy loans to buy investment-linked insurance policies; the same person was allowed to handle the policy loan and sell the insurance; and the accurate information regarding the source of funds for premium payments was not provided in insurance solicitation reports.