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Chairman’s Statement on the Postal Privatization Committee’s Advice on Japan Post Insurance’s New Business with Redesigned Whole-Life Insurance Product
14 June, 2017
On 14 June, The Postal Privatization Committee (the Committee) publicly released its Advice (the Advice) on New Businesses by Japan Post Insurance (JP Insurance) with redesigned Whole-Life Insurance Product and additional consigned corporate insurance product.
Taking previous opportunities of the public consultation and the committee’s hearings for consultation respondents, the LIAJ has repeatedly argued on this issue to the following effect:
▶ In advancing the Postal Privatization, it is essential that Japan Post Holdings and the other private life insurers recognize, and when appropriate, make use of each other’s strengths and characteristics through business collaboration. Meanwhile, in expanding the business of JP Insurance, complete disposal of the JP Insurance’s shares by the government to achieve a level playing field and adequate business management arrangements to reflect the business of JP Insurance are inevitable.
▶ JP Insurance’s new educational endowment insurance product launched in April 2014 captured a significant market share. Consumers’ expectation on the government’s involvement in JP Insurance, which would have been caused by indirect contribution from the government, seems to have boosted it. Therefore, it can hardly be said that a level playing field has been achieved for now.
▶ We cannot agree to give approval for the new business by JP Insurance with redesigned whole-life insurance product and term individual annuity product because they can have a considerable impact on the respective market, in the same manner as the educational endowment insurance.
The Committee concludes in the Advice that no blocking concerns was identified for the launch of all businesses filed for approval, based on their basic ideas and assessment in light of the observation. The Advice includes their view on the level playing field, stating with regard to the impact on other financial institutions, the discussion should focus on enhancement of customer convenience in order to foster competition between JP Insurance and other private life insurers. Care must be taken so as not to withhold approval just because of potential concerns.
The LIAJ would argue the Committee’s view that, given the circumstances where virtual government ownership is not dissolved and yet even a specific plan for completion of its privatization is not announced, deliberation on easing of restriction on JP Insurance’s new business activities needs to be made in a careful manner. As such, the Committee seems to have not paid due consideration to the aspect of a level playing field, which needs to be taken care.
Taking this opportunity, the LIAJ would argue for the announcement and robust implementation of a specific plan for completion of the privatization in order to ensure a level playing field. Also, the LIAJ would request the Committee to monitor impact on the market following the launch of new products and equally to continue engaging in dialogue with the private life insurance sector in competition with JP Insurance.
The Life Insurance Association of Japan