Insurance leader speaks out against allowing banks

Banks’ entry into the insurance business would reduce competition and should not be permitted, even through holding companies, the head of the nation’s nonlife insurance industry said Feb. 20.

Takeo Inokuchi, chairman of the Marine and Fire Insurance Association of Japan, told a news conference that banks, with their vast collection of personal financial data, would have too much of an edge in selling policies. “While we are not against the idea of banks setting up holding companies in itself, we do not want to see them handling nonlife insurance,” he said. “The impact would be too great.” Such a situation would not be beneficial for potential policyholders either, he added, because the competitive edge the banks would have may put consumers in a weaker position, in terms of buying an optimal policy.

On the issue of reforming the current system, under which nonlife insurers are obliged to adhere to the premiums calculated by neutral rating organizations, Inokuchi, who is also president of Mitsui Marine and Fire Insurance Co., said the industry opposes the idea of reorganizing the rating organizations into profit-seeking enterprises.