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Potential Violations Seen In 12,836 Kampo Contracts

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TOKYO (Jiji Press) — Japan Post Holdings Co. President Masatsugu Nagato suggested Wednesday that he will consider stepping down from the post to take responsibility for improper sales practices for “Kampo” insurance products of subsidiary Japan Post Insurance Co..

“The whole management team feels huge responsibility [for the irregularities],” he told a press conference. An announcement on management responsibility over the matter will be made “at an appropriate time,” he added.

A special committee probing the issue said in a report the same day that the number of Japan Post Insurance contracts that may have violated the law or internal rules during sales processes has totaled 12,836. Of the total, the committee, comprising external lawyers, recognized such violations for 670 contracts.

The report noted that over 70% of affected policyholders are aged 60 or over. Of those affected, 85% are women, it said. “I deeply apologize for causing trouble and worries to customers,” Nagato said.

As factors that are believed to have led to the sales irregularities, the committee pointed to a questionable allowance system that puts too much weight on winning new contracts while saying that sales targets that are difficult to achieve have been set. It also pointed to an organizational climate that trivializes problems and ambiguous rules to share information, adding that the improper sales practices tended to be tolerated.

To prevent a repetition of such practices, the committee proposed that the Japan Post Holdings group start the audio and visual recording of contract procedures for Kampo insurance products and overhaul its employee evaluation system, and have a third-party organization regularly check the progress in the implementation of such corrective measures.

It also urged the group to correct the current system of heavily relying on post offices across the nation for Kampo insurance sales.

Following the proposal by the committee, the Japan Post Holdings group announced a set of preventive measures, including the trial launch in April 2020 of audio recording of insurance contract procedures and the abolition in April or later of allowances paid to employees when policyholders switch to different Kampo insurance products.

The allowances are believed to be a major factor prompting the irregularities.

“We’ll make efforts to ensure that each of our employees works by complying with the law,” Nagato said at the press conference, adding, “The Japan Post Holdings group will fully strive to regain trust as early as possible.”

In July this year, the Japan Post Holdings group said sales irregularities had possibly affected a total of some 183,000 contracts, involving 156,000 policyholders, in the previous five years.

Of the total, investigations had been completed by Friday for some 148,000 contracts, involving about 128,000 policyholders.

The committee will continue its investigation of the problem and is expected to submit an additional report at the end of March next year.
Over the insurance sales fiasco, Japan’s Financial Services Agency is expected to order Japan Post Insurance and Japan Post Co., the operator of post offices, to suspend part of their businesses and slap a business improvement order on Japan Post Holdings. The orders are likely to be issued on Dec. 27.
 
 

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