The nation's life and nonlife insurers stressed on Friday the need to use public funds in some way when insurance firms collapse because the burden would be too great for the industry to bear alone.
The requests came during a morning session of a Liberal Democratic Party panel currently considering ways to restore confidence in the domestic financial sector. The lawmakers said it was necessary to carry out careful discussion of how much impact an insurer's collapse would have, given the current uncertainty surrounding the financial system.
The insurance industry has a fund to help protect policyholders, and the government is working on plans to set up a new legal system to handle insurance firm failures. However, representatives from the Life Insurance Association of Japan and the Marine & Fire Insurance Association of Japan said that while they are prepared to contribute their fair share to such a scheme, there will be a limit to the aid other insurers can offer as financial deregulation gives birth to a more competitive market.
Thus, they said, it is imperative that the government considers infusing public money to help in the event of an emergency. The LDP and the government have already basically agreed that some form of public support is needed to strengthen the Deposit Insurance Corp., which protects depositors at banks.