Life insurance firms will have to disclose their solvency margins under a new policyholders' protection system being formed by the Finance Ministry, the chairman of the Life Insurance Association of Japan said Friday.
Solvency margins show a life insurer's ability to pay insurance money in unusually disastrous situations.
Yuzuru Fujita, who is also president of Asahi Mutual Life Insurance Co., said "a proper environment" must be available before solvency rates are disclosed. The establishment of the ministry's Payment Guarantee System is a prerequisite for that, he said. At a regular news conference in Tokyo, Fujita stressed that disclosure is necessary but that timing is crucial, because solvency margins alone may confuse policyholders.
He denied speculation that the industry's reluctance to disclose data stems from fears that weak life insurers may collapse, but admitted that such firms' sales may be hurt. The life insurance industry's policyholders' protection fund was used up this year to liquidate Nissan Mutual Life Insurance Co. No safety net is available to cope with another bankruptcy.