The agency that is starting to convert the Kampo Japanese life insurance program into a private company should take another look at Japan’s postal privatization laws, according to 8 North American and European trade groups.
Officials at the groups write about Kampo privatization in a letter sent to Japan’s Postal Privatization Commission.
The commission recently released a collection of “findings” regarding new business operations by the Postal Insurance Corp., the company that would replace the current Kampo system.
Kampo now controls about 40% of Japan’s life market, in part because it receives many hidden and explicit government subsidies, opponents of the current system say.
A list of basic principles in Japan’s postal privatization law “requires Japan to implement measures to ensure equivalent conditions of competition [between the privatized entities] and other companies engaged in like business organizations,” coalition officials write in the letter. “Unfortunately, the commission, in its findings, has chosen to substantially ignore this key global best practice…conspicuously absent are any references to the ‘equal competitive conditions.’”
Efforts to privatize Kampo without creating fair market rules would help Japanese consumers as well as competing insurers, coalition officials write.
“Any measures that would increase market distortions…would simply put at risk the soundness of the financial market,” coalition officials write.
Coalition officials say a fair regulatory framework should remove explicit and de facto government guarantees from the privatized postal life insurance system; make the privatized postal life system meet the same regulatory requirements imposed on other life insurers; apply the same tax rules to the privatized company and other insurers; and give competitors access to the privatized postal insurance company’s distribution channels.
The 8 organizations that have signed the letter are the American Chamber of Commerce in Japan, Tokyo; the American Council of Life Insurers, Washington; the Association of British Insurers, London; the Canadian Life and Health Insurance Association, Toronto; the Canadian Services Coalition, Ottawa, Canada; the Coalition of Service Industries, Washington; the Council of Insurance Agents and Brokers, Washington; and the U.S.-Japan Business Council, Washington.
“The Postal Privatization Commission deserves credit for its efforts to date to ensure transparency in its role in the privatization process,” ACLI President Frank Keating says in a statement about the commission’s findings.
But Keating says the commission has to show it is serious about creating a level playing field.