The ruling coalition said Tuesday it will put off until after the spring elections a contentious plan to allow troubled life insurers to cut the yields they have guaranteed to policyholders, because the plan is unlikely to win public support.
But the plan is expected to be discussed again in and after May following the unified local-level elections — a series of gubernatorial and local assembly polls nationwide — in April, ruling bloc officials said.
Last week, the Financial Services Agency presented a draft proposal for the yield cut to the Liberal Democratic Party, New Komeito and the New Conservative Party in the hope that an amendment to the Insurance Business Law could be submitted to the Diet in mid-March.
But due to concerns that the proposal would have a negative impact on the ruling parties in the elections, coalition lawmakers decided to postpone the plan for now, sources within the ruling bloc said.
Earlier Tuesday, secretaries general and Diet affairs committee chairmen of the three parties met to decide formally on the postponement.
Speaking to reporters after the meeting, LDP Secretary General Taku Yamasaki said, “We’d like to deepen the debate further within the ruling coalition.”
Following the coalition’s decision, a bill to be submitted to the Diet in mid-March will only include measures to extend the government’s commitment on public funds for a safety-net operated by life insurers.
The life insurance industry is undergoing difficulties as many insurers have suffered for years from “negative spreads,” in which the re- turns on their invest- ments have been significantly below the yield rates they promised.
An increasing number of government officials and coalition lawmakers have thus been more willing to discuss plans to allow reductions in guaranteed returns while insurers are still in business to help keep policyholders from incurring more losses from potential failures.
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