Many life insurance companies promised their representative policyholders Wednesday that they would maintain guaranteed yields on policies even if a law enabling them to cut the yields is enacted.
“We will never cut the yields, as we maintain healthy business conditions,” Nippon Life Insurance Co. President Ikuo Uno told policyholders at an annual meeting.
Most Japanese life insurers are mutual companies and the meetings of representative policyholders are the equivalent of shareholders’ meetings at stock companies.
The government-proposed legislation, which cleared the House of Representatives on June 12, is designed to prevent life insurers from going bankrupt and possibly destabilizing the financial system, according to the government.
But many insurance companies have said they will not apply for permission to cut yields, fearing it could trigger a wave of policy cancellations.
Yuzuru Fujita, president of Asahi Mutual Life Insurance Co., said his firm does not plan to cut guaranteed yields.
“We have secured a core operating profit, so there is no such need,” Fujita said at that firm’s meeting.
Meiji Life Insurance Co. and Yasuda Mutual Life Insurance Co. explained to policyholders a plan to merge in January and obtained their approval.
Nippon Life meanwhile said at its policyholders meeting it will do its best to prevent a recurrence of the misleading sales practices the company used to solicit new clients for cancer insurance policies.
The Fair Trade Commission issued a warning to Nippon Life on May 9 over the practices, conducted between January 2001 and November 2002, which involved using misleading wording in leaflets and sales pitches.
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