TOKYO -- Japan Post Co. is finalizing arrangements to temporarily halt sales of all insurance products commissioned by private insurance companies at post offices following the discovery of illicit sales of Japan Post Insurance products.
Japan Post envisages withholding commissioned sales as well as sales of Japan Post Insurance policies until the end of the year. By that time, an in-house investigation into the illicit sales of the products is expected to be completed, and a report by a special fact-finding committee comprising lawyers will be available.
Sales of Japan Post Insurance products are a mainstay of Japan Post Co.'s revenue, and the move will adversely affect Japan Post's earnings. It is also expected to impact the overall management of the Japan Post Holdings Co. group.
The Japan Post Holdings group intends to hold a press conference later this month to explain the moves.
It has already emerged that Japan Post employees sold some 93,000 insurance policies while knowing that the terms were disadvantageous to customers. The figure could swell even further after investigations.
On July 26, Japan Post sounded out Aflac Life Insurance Japan Ltd. about refraining from the sales of Aflac products at postal offices. As the sales account for approximately 25% of new contracts acquired by Aflac in terms of annualized insurance premiums for fiscal 2017, the company has sought continued sales of its products over postal counters even after the revelation of the Japan Post Insurance scandal. The two companies will continue their talks until early next week.
After the illicit contract problem surfaced, Japan Post decided to refrain from selling Japan Post Insurance products until the end of August, while suggesting that it would continue to sell products commissioned by other insurers including Aflac, Nippon Life Insurance Co. and Sumitomo Life Insurance Co.
Major insurers, however, raised questions about the continuation of the consignment sales as they argued that the Japan Post scandal stemmed from its in-house sales system at post offices. This included excessive sales quotas for employees. One major insurer argued, "It is unreasonable to refrain from the sales of Japan Post Insurance products alone." Specifically, Nippon Life Insurance and Sumitomo Life Insurance have demanded that Japan Post withhold from sales of their products.
(Japanese original by Akiko Kato and Shiho Fujibuchi, Business News Department)