Business

U.S. insurance group cautious over postal plan

WASHINGTON (Kyodo) A U.S. life insurance industry group reacted cautiously Thursday to the plan Japan drafted for privatizing state-run postal operations, including “kampo” life insurance services.

“We are certainly encouraged by several elements of the plan, but we are also troubled by some portions containing ambiguous language,” said Frank Keating, president of the American Council of Life Insurers.

“On the positive side, the CEFP outline addresses the need for a level playing field. However, it does not specify when a level playing field will be achieved,” he said.

Keating was referring to a draft basic policy adopted last week by the Council on Economic and Fiscal Policy, a key policy-setting panel in Japan, for privatizing Japan Post, a state-backed corporation in charge of postal services.

The plan calls for splitting Japan Post into four independent businesses for mail delivery, postal savings, life insurance and management of over-the-counter services at post offices, and putting them under a holding company.

The draft explains that the newly privatized corporations shall “in principle” have the same obligations as private corporations from the beginning of the transition period, and suggests opening up kampo’s ability to market new products in competition with the private sector.

“We continue to stand by the principle that no new or modified product sales by kampo should occur until all the factors that contribute to today’s nonlevel competition are remedied,” Keating said.

The U.S. insurance group also said there is a “a lack of clarity” with regard to the relationship of the new postal entities to each other and to a holding company, and demanded there be “absolute independence, including financial independence,” among the entities under the plan.

“It is our hope that through intensive and constructive dialogue now, the CEFP final report will be improved,” Keating said. “We look forward to a report that is less ambiguous about the key level playing field principles we have stressed.”

Coronavirus banner