The ACRC's recent research on insurance contracts for official vehicles of public organizations found that there were many cases of suspected corruption caused by collusion between insurers and the public officials in charge of contracting the insurance, as well as a waste of budget resulting from miscalculation of the vehicle price, which is the base of calculating the insurance premium.

 

Recognizing that there have been considerable risks of special favors to insurers and a waste of budget in the process of insuring official vehicles, the ACRC issued a recommendation in 2009 that public organizations mandatorily receive open bids from insurers when insuring official vehicles for more than a certain amount of insurance premium. The fact-finding research was conducted to check the implementation of the recommendation.

The research revealed many suspicions of collusive ties between officials in charge of insurance contracts and insurers: some public organizations arbitrarily applied the contract rules of the Ministry of Security and Public Administration, gave public notices of bids with the same insurance coverage plans of certain insurers, giving advantages to the insurers, or gave bids with extremely short notices.

 

In addition, there were cases where the "vehicle price," which is the basic standard to calculate the insurance premium, was improperly calculated, showing a big difference in the vehicle prices of the same models that were purchased around the same time. Underestimated vehicle prices can lead to inadequate indemnities from insurers in the case of car accidents.

 

Moreover, there was a case where a certain insurance company was selected after going through a token bidding competition in which a single corporate body acting for several insurers placed bids.

 

The ACRC informed all the public organizations about the results of the fact-finding research and requested that the organizations get rid of corrupt and budget-wasting factors by prohibiting such behaviors causing suspicions of collusive ties with insurers, abiding by the related contract rules, and securing reliable information about vehicle prices.