The Financial Services Agency has no intention of forcing life insurance companies to cut guaranteed yields on policies under a proposed law revision, a senior FSA official said Thursday.
"Life insurance companies can apply individually, and we would look at things reasonably in deciding whether to approve a cut," Takashi Fujihara, head of the FSA's Planning and Coordination Bureau, told the House of Councilors Financial Affairs Committee.
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 some insurance companies have said they will not apply for permission to cut yields because such a move could trigger a wave of policy cancellations.
The bill requires a life insurance company to obtain consent from policyholders before applying for a yield cut.
Some critics say the financial authorities may try to force struggling life insurers to cut the pledged yields to trigger a realignment of the industry.