An advisory council to the commissioner of the Financial Supervisory Agency on Wednesday proposed eliminating the compulsory premiums drivers must pay under the state-run automobile insurance system.

In a report submitted to FSA Commissioner Masaharu Hino, the Compulsory Automobile Liability Insurance Council also recommended the government institute a system to compensate people seriously handicapped in traffic accidents.

Under Japan's two-tiered automobile insurance system, the government pays the first 30 million yen in liability costs to people injured in a traffic accident or to the families of those killed, and nonlife insurance firms cover the remainder.