A U.S. life insurance industry group has expressed disappointment with Japan's decision to require additional private-sector contributions to a safety-net body for policyholders, saying the amount is insufficient.
While admitting that the Life Insurance Policyholders Protection Corp. of Japan needs replenishing, the American Council of Life Insurers said Japan's historical lack of solvency regulation caused the current funding problem.
"We believe it is the Japanese government's responsibility to ensure it is funded adequately," Brad Smith, ACLI managing director in charge of international affairs, said in a statement.
Under the Life Insurance Business Law, all life insurance companies operating in Japan must contribute to the institution, created to protect policyholders in the event of a life insurer's failure.
In December, the Life Insurance Association of Japan accepted a request from the Financial Services Agency to put up an additional 100 billion yen for the safety-net if the state keeps in place for three years its legal privilege to spend up to 400 billion yen if contributions fall short of paying back the policyholders.
Life insurers operating in Japan have so far contributed a total of 560 billion yen to the safety-net body. But only 22 billion yen remains due to a series of failures of life insurers.