Fine Imposed on Ming Tai Property & Casualty Insurance Co., Ltd. for Violations of the Insurance Act — FSC — TW

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Ming Tai Property & Casualty Insurance Co., Ltd. was found to have violated relevant provisions of the Insurance Act in conducting insurance business. Pursuant to Article 171-1, Paragraph 4 and Article 171, Paragraph 1 of the Insurance Act, a fine of NT$9,000,000 is imposed.

2025-05-15

I. Date of Penalty: May 15, 2025 (Year 114)

II. Penalized Entity: Ming Tai Property & Casualty Insurance Co., Ltd.

III. Unified Business Number: Omitted

IV. Address: Omitted

V. Name of Representative or Manager: Shi Chi OO

VI. Address: Omitted

VII. Subject: Your company was found to have violated relevant provisions of the Insurance Act in conducting insurance business. Pursuant to Article 171-1, Paragraph 4 and Article 171, Paragraph 1 of the Insurance Act, a fine of NT$9,000,000 (hereinafter referred to as "NT$") is imposed.

VIII. Facts:

(1) In your company's estimation of claims for voluntary automobile insurance in 2023 (Year 112) and 2024 (Year 113), there were instances of failing to input estimated claims within 3 to 7 working days after accepting claims in accordance with internal operational specifications, failing to accurately estimate future potential claim amounts based on relevant vouchers, and closing cases prematurely without meeting the conditions for exemption from claims. These delays and underestimations of claims resulted in an underestimation of claim reserves and claim losses. Specifically, the number of cases with delayed estimation and underestimation of claims in 2023 and 2024 were 53,725 and 47,286, respectively, accounting for 43.2% and 38.68% of your company's total claim cases for those years. These issues were prevalent across all branch offices, yet your company's management failed to take corrective measures in a timely manner.

(2) Your company's internal audit operations did not strictly implement the prescribed audit items such as "estimation deviation" and "input timeliness." The audit department also failed to prudently consider that the company had established internal operational specifications for claim estimation and auditing, and did not include pending claim cases within the scope of internal audits. This resulted in the failure to timely discover major deficiencies in the claim estimation process.

(3) The Major Sudden Event Record Sheet of your company dated October 30, 2024 (Year 113), indicates that internal control deficiencies regarding the delayed estimation of voluntary auto insurance claims were known as of August 2024. Your company formed an investigation team composed of senior executives, including the General Manager, Chief Risk Officer, Chief Auditor, and Compliance Officer, on September 5, 2024, to conduct an investigation. A Major Sudden Event Assessment Meeting was held on September 18, 2024, during which your company admitted to improper internal management and negligence. However, your company did not report the major sudden event until October 30, 2024, after discovering on October 29, 2024, that there were still over NT$500 million in under-estimated claims requiring adjustment.

(4) In the provision of claim reserves for reported but unpaid claims for voluntary automobile insurance in 2023 and 2024, your company failed to estimate and provision for reported but unpaid insurance claims on a case-by-case basis using actual relevant data. This resulted in an underestimation of claim reserves by NT$148 million as of the end of June 2024, by over NT$312 million as of the end of August 2024, and by over NT$575 million as of the end of October 2024.

IX. Reasons and Legal Basis:

(1) According to Article 5, Paragraph 1, Items 3, 5, and 8 of the "Implementation Measures for Internal Control and Audit Systems of Insurance Companies," promulgated under the authorization of Article 148-3, Paragraph 1 of the Insurance Act, insurance companies shall, according to the nature and scale of their business, establish control operation procedures for various businesses based on the principle of internal checks. This includes control operations for insurance product claims processing, solvency assessment, and accounting, general affairs, resources, and other businesses, and these procedures should be reviewed and revised in a timely manner. Regarding Fact 1 above, your company's estimation of claims for pending cases directly affects the recognized amounts of reported but pending claim reserves and claim losses, and influences the accurate presentation of the company's operating performance and financial status. Your company's serious instances of delayed estimation and underestimation of claims, prevalent across all branch offices, and the failure of management to take timely corrective measures, caused these violations to persist. This constitutes a comprehensive and systemic violation, with major circumstances of failing to implement internal operational specifications. This is inconsistent with Article 5, Paragraph 1, Items 3, 5, and 8 of the "Implementation Measures for Internal Control and Audit Systems of Insurance Companies." Pursuant to Article 171-1, Paragraph 4 of the Insurance Act, a fine of NT$4,800,000 is imposed.

(2) According to Article 7, Paragraph 1 of the "Implementation Measures for Internal Control and Audit Systems of Insurance Companies," promulgated under the authorization of Article 148-3, Paragraph 1 of the Insurance Act, to maintain the effective operation of internal control systems and achieve internal control objectives, insurance companies shall establish internal control three lines of defense, including a self-audit system, compliance system, risk management mechanism, and internal audit system. Regarding Fact 2 above, the proportion of delayed estimation and underestimation of claims for your company's voluntary auto insurance was very high. In addition to failing to strictly implement internal audit operations, your company also failed to verify the effectiveness of internal audit operations and comprehensively assess the impact of claim estimation for pending cases on the company's financial and business status. Your company arbitrarily classified these cases as low-risk operations and excluded them from the scope of internal audits. The risk assessment and formulation of audit plans were evidently negligent, indicating that your company had long disregarded internal control-related procedures. This resulted in the failure of all three lines of defense of the internal control system to function effectively. This is inconsistent with Article 7, Paragraph 1 of the "Implementation Measures for Internal Control and Audit Systems of Insurance Companies." Pursuant to Article 171-1, Paragraph 4 of the Insurance Act, a fine of NT$1,800,000 is imposed.

(3) According to Article 5, Paragraph 1, Item 12 of the "Implementation Measures for Internal Control and Audit Systems of Insurance Companies," promulgated under the authorization of Article 148-3, Paragraph 1 of the Insurance Act, insurance companies shall, according to the nature and scale of their business, establish control operation procedures for the handling of major sudden events based on the principle of internal checks, and these procedures should be reviewed and revised in a timely manner. Regarding Fact 3 above, when your company adjusted reserves in August 2024, it discovered deficiencies in poor internal control operations. Although an investigation team composed of senior executives, including the General Manager, was formed on September 5, 2024, to conduct an investigation, and a Major Sudden Event Assessment Meeting was held on September 18, 2024, during which your company admitted to improper internal management and negligence, your company still failed to prudently examine the severity of the issue. Your company did not report the major sudden event until October 30, 2024. This is inconsistent with Article 5, Paragraph 1, Item 12 of the "Implementation Measures for Internal Control and Audit Systems of Insurance Companies." Pursuant to Article 171-1, Paragraph 4 of the Insurance Act, a fine of NT$1,200,000 is imposed.

(4) According to Article 11, Paragraph 1 of the "Measures for the Provision of Various Reserves by Insurance Companies," promulgated under the authorization of Article 145, Paragraph 2 of the Insurance Act, property insurance companies shall calculate claim reserves in accordance with actuarial principles based on past claims experience and expenses by insurance type, and shall provide for reported but unpaid and unreported insurance claims. Among these, reported but unpaid insurance claims shall be estimated on a case-by-case basis using actual relevant data and provided for by insurance type. Regarding Fact 4 above, your company admitted that due to delayed estimation and underestimation of voluntary auto insurance claims, there was an underestimation of claim reserves. This has seriously affected the accurate presentation of the company's financial reports and hindered the grasp of the company's true operating status. The facts of the violation are clear. This is inconsistent with Article 11, Paragraph 1 of the "Measures for the Provision of Various Reserves by Insurance Companies." Pursuant to Article 171, Paragraph 1 of the Insurance Act, a fine of NT$1,200,000 is imposed.

X. Payment Method:

(1) Payment Deadline: Payment must be made within 10 days from the day following the service of this disposition.

(2) Please follow the instructions on the payment slip attached by this Commission for payment.

XI. Important Notes:

(1) If the penalized entity disagrees with this disposition, it shall, within 30 days from the day following the service of this disposition, file an administrative appeal pursuant to Article 58, Paragraph 1 of the Administrative Appeal Act. The appeal shall be submitted via this Commission (18th Floor, No. 7, Section 2, Xianmin Avenue, Banqiao District, New Taipei City) to the Executive Yuan. However, pursuant to Article 93, Paragraph 1 of the Administrative Appeal Act, unless otherwise provided by law, filing an administrative appeal does not suspend the execution of this disposition. The penalized entity must still pay the fine.

(2) If the penalized entity fails to pay the fine within the payment deadline specified in this disposition, the case shall be transferred to the various sub-bureaus of the Administrative Execution Agency, Ministry of Justice, for administrative execution, pursuant to the proviso of Article 4, Paragraph 1 of the Administrative Execution Act.

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Last Updated: 2025-05-15

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