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ACLI Praises Japanese Life Privatization Draft

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The American Council of Life Insurers, Washington, is welcoming a new plan for privatizing Japan’s enormous Kampo postal life insurance system.[@@]

U.S. life insurers and private Japanese life insurers have been complaining for years about the many advantages that Japan offers the Kampo system.

Japan’s Council on Economic and Fiscal Policy released a Kampo privatization plan draft Tuesday that contains encouraging recommendations, according to a statement by ACLI President Frank Keating.

“These recommendations clearly move in the right direction,” Keating says. “Doors have been open to us and, while differences exist, there has been a readiness by policymakers to listen to our perspective, which we appreciate.”

But Keating says the ACLI wants to see a complete privatization plan draft before coming to any firm conclusions about the plan.

“The draft basic policy contains ambiguities and unresolved issues,” Keating says.

The Kampo privatization draft calls for the government to start putting Kampo and private life insurers on an equal competitive footing in 2007. The privatization effort would abolish government guarantees for Kampo products, require Kampo to pay the same taxes that its private competitors pay and put Kampo under the same regulatory regime that now applies to private insurers.

Keating lists 3 major concerns about the privatization plan. In his opinion:

- The plan is unclear about how Kampo will be organized after the privatization and what ties Kampo will have to other postal businesses.

- The plan is unclear about how income from the government-guaranteed, pre-privatization policies will be separated from the income from the privatized Kampo’s policies.

- The plan is unclear about when and how the government will ease current restrictions on Kampo’s ability to enter new product segments.

The Japanese government should make Kampo play on a “level and fair playing field” before letting it expand its product line, the ACLI argues.

Links to Japanese-language CEFP documents discussing the reform draft are on the Web at