A group of legislators in the Liberal Democratic Party has started considering ways to enable life insurers to cut guaranteed yields to policyholders, including a proposal for the Financial Services Agency to order financially troubled firms to make the cuts, it was reported Tuesday.
Under the proposal to force life insurers to cut guaranteed yields, an independent body to monitor the management of life insurance companies would recommend the FSA order them to cut the yields if the body believes the firms’ financial health would further deteriorate without the step, some of the lawmakers in the group said.
The group also discussed a proposal under which life insurance companies would voluntarily apply to cut the investment returns promised to policyholders to improve their financial standing, the lawmakers said.
The FSA is to decide by mid-March whether to allow life insurers to cut the yields, although agency officials have said it has not yet made a formal decision.
The FSA is said to have informally decided to submit a bill to the Diet in March to revise the Insurance Business Law to allow the cut, upon submission of applications by life insurers.
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