The head of the American Council of Life Insurers, Washington, is giving a mixed review to efforts by Japanese Prime Minister Junichiro Koizumi to reform Japan’s Kampo postal life insurance operation.[@@]
The ACLI likes many aspects of the reform effort, but it wants the Japanese government to keep Kampo in check while the reform process is under way, ACLI President Frank Keating said here at a press conference on Japanese reform proposals.
Keating spoke in reaction to a recent move by Koizumi’s cabinet to adopt the “Basic Policy on the Privatization of the Postal Services.” The policy calls for the Japanese government to split Japan’s postal service into 4 separate entities under the control of a single holding company. Separate entities would handle postal services, postal savings, postal life insurance and a group of over-the-counter services.
The Kampo postal life operation is the largest life insurance operation in the world, and the ACLI has joined private Japanese life insurers in condemning the many special privileges it has enjoyed.
The government exempts Kampo from taxes, guarantees Kampo’s policies, frees Kampo from contributing to the policyholder protection fund and applies a looser regulatory regime when supervising Kampo’s operations.
Keating said the ACLI wants the Japanese government to keep Kampo from getting even further ahead of its competitors during the transition period, when it is preparing for privatization.
“We have consistently maintained that Kampo and its successor should not be allowed to introduce any new or modified products, unless and until the competitive playing field has been completely leveled,” Keating said. “In fact, in several places, the ‘Basic Policy’ refers to the expansion of the postal businesses into new areas of business without suggesting that any constraints will be placed on that expansion, apart from the retention of a 10 million yen ceiling as benefits for certain insurance policies ‘for the time being.’”
Keating also expressed concern that Japan might continue to offer Kampo’s private successor, the Postal Insurance Corp., special exemptions from Japan’s Insurance business Law.