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Japan Post staff may have forced insurance clients to keep policies over sales bonuses

A sign for Japan Post Co., top, and Japan Post Insurance Co. (Mainichi/Kazuhisa Soneda)

TOKYO -- Post office employees may have forced customers to stay in contracts for two years-plus to avoid returning part of their sales commissions, adding yet another layer of potential misconduct to a firm already beleaguered by revelations of overcharging and predatory sales tactics.

It had recently been revealed that Japan Post Co. and Japan Post Insurance Co. -- both part of the Japan Post Holdings group -- double-billed nearly 28,000 customers when they changed plans, and sold more than 90,000 policies in the knowledge that they were detrimental to the clients concerned.

On July 12, Japan Post Insurance also revealed that its policy cancellation numbers spiked once contracts had entered their third year. Japan Post staff are paid commissions for each policy sold, but must return the funds if the contract is canceled within two years, raising suspicions that employees compelled customers to hold onto their policies just long enough to protect their bonuses. It earlier came to light that in about 70,000 cases, customers switched their insurance contracts at a time when postal workers' sales commissions were increased, and the insurance firm has launched an internal investigation. The postal and insurance firms also decided on July 12 to voluntarily suspend insurance product sales.

The suspiciously convenient timing of the policy cancellations strongly suggests a widespread sales culture of contempt for customers.

According to Japan Post Insurance, it examined the status of some 6 million contracts sold through post offices in the 2010 to 2012 fiscal years that were subsequently canceled, and found that the largest percentage of these had been dissolved after the two-year mark.

Under previous company rules, the employee who sold a policy would have to return 100% of their commission if the contract was canceled within six months, 50% if it was annulled within a year and three months, and 25% if it was scrapped within two years. If the contract remained on the books for two years or more, the salesperson could keep their entire commission.

Both Japan Post and Japan Post Insurance are aware that the commission and performance bonus system may have contributed to a toxic sales culture that belittled clients, and revamped the way the figures are calculated in April this year. They furthermore extended the minimum policy contract length for staff to keep their sales commissions from two to three years, and added a sales evaluation category for keeping customers in their current contracts. Commissions for switching a client from one policy to another will also be abolished as early as August.

In addition to the suspicious timing of the policy cancellations, it has been found that one elderly client had canceled contracts and then signed new ones more than 50 times in a 10-year period. Japan Post believes employees may have sought to rack up sales commissions by using misleading or false explanations to prompt the individual to keep switching plans, and is conducting investigative interviews.

Japan Post Insurance's self-imposed suspension of insurance product sales activities is expected to last until the end of August, though this could be extended if further problems surface.

(Japanese original by Akiko Kato, Business News Department)

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