Press Conference by SUZUKI Shunichi, Minister of Finance and Minister of State for Financial Services

(Excerpt)

(Tuesday, December 26, 2023, 11:01 am to 11:10 am)

[Opening remarks:]

Minister)

This is this year’s last post-Cabinet meeting press conference. I would like to express my heartfelt appreciation for the cooperation you extended to us in various ways during the past year, including conveying the opinions of the Ministry of Finance and the Financial Services Agency (FSA) to the people.
I would like to make comment on administrative actions for four major non-life insurance firms.
Today, in relation to the adjustment of insurance premiums by four non-life insurance firms, Aioi Nissay Dowa, Sompo Japan, Tokio Marine & Nichido Fire, and Mitsui Sumitomo, we issued business improvement orders to the four firms as administrative actions based on the Insurance Business Act. This order requires each firm to clarify where managerial responsibility lies, drastically strengthen the business management system, submit a business improvement plan, and report subsequent progress, etc.
It is really regrettable that in light of the purpose of the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade, the four major non-life insurance firms engaged in inappropriate practices, and we will request each of them to take this incident seriously and implement measures for drastic improvements so that a similar incident will not occur again.
In the future, the FSA will properly check the progress in business improvements at each firm. Details will be explained by the office in charge.

[Questions and answers:]

Q.

You said that administrative actions are imposed on the four major non-life insurance firms to clarify the responsibility of their management for widely practiced price adjustments, and in this incident, over 100 firms’ insurance premiums are adjusted in advance in order to keep premiums high. I would like to ask you about how you look at the vicious nature of this incident and what actions you will require the management of each firm to take in order to clarify their managerial responsibility.

Minister)

As mentioned earlier, today the FSA issued business improvement orders to the four major non-life insurance firms in accordance with the Insurance Business Act.
In this incident, the results of the order to request reports and other actions in the past indicated that in light of the purpose of the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade, inappropriate practices were widely repeated or continued mainly in sales divisions for enterprises, and in addition, system problems, including systems for compliance with laws and regulations, were found.
The causes for these problems include an environment that distorted fair competition among businesses as exemplified by cross-shareholdings and sales cooperation, strongly encouraging to sales representatives for greater profits amidst the loss-making fire insurance business despite the difficult market environment to win new contracts, and the corporate culture that slighted compliance and customer protection. As described above, these firms had system problems that stretched over their entire organization.
In spite of this environment, the management failed to give full consideration to required actions, and as a result, in light of the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade, the four firms widely repeated or continued inappropriate practices on a company-wide scale, and we regard this incident as highly vicious. It is highly regrettable that this incident occurred, and we will strongly demand that each firm take the business improvement  order seriously and take drastic measures for improvement so that a similar incident will not occur again.
You asked a question about clarifying where managerial responsibility lies. The business improvement order required the four major non-life insurance firms to clarify where the responsibility for price adjustments and other practices lay, and we believe that taking into account the true cause of the incident and the responsibility of their management for the incident, each firm should independently consider required specific actions.
The time required to follow up on the progress in improvement depends on the details of each firm’s initiatives and the progress therein, and we would like to refrain from answering based on speculation about it because there is no telling how long it will take, but we will request that each firm makes swift and appropriate business improvements.

Q.

When was a business improvement order simultaneously issued to the four major non-life insurance firms last?

Minister)

I do not know. The office in charge will give explanations to you this afternoon. Please ask them at the briefing.