The government, nonlife insurance companies and traffic accident victims need to further discuss whether the state reinsurance provision of the compulsory automobile liability insurance system should be abolished before the system is revised, a Transport Ministry panel said in a report submitted Thursday to Transport Minister Jiro Kawasaki.

Japan's insurance firms have been calling on the government to abandon the reinsurance clause as a deregulatory measure.

The panel also emphasized the importance of providing sufficient protection for accident victims by guaranteeing insurance money for victims who are not covered under the current system.

In Japan, automobile owners must purchase compulsory automobile liability insurance through nonlife insurance companies. The premium for compulsory insurance that pays death benefits of up to 30 million yen is 13,800 yen per year for an ordinary passenger vehicle with a two-year "shaken," or automobile inspection.

The government takes 60 percent of the premiums as reinsurance, and the rest is pooled by the nonlife insurance firms. The government and nonlife insurance companies pay out claims at the same ratio.

This system was established in 1955 to protect victims of traffic accidents because some nonlife insurance companies were unable to cover claims at that time.

In discussions by the panel, formed in February, nonlife insurance companies insisted on the abolition of the government reinsurance system, whereas a representative of traffic accident victims expressed anxiety that such a move might lessen victims' protection.

Under the current system, the government can oversee if victims are properly compensated by checking transactions of insurance money from the government reinsurance account to nonlife insurance firms.