Two disclosures of payout misdeeds involving Meiji Yasuda Life Insurance Co. in the last six months are casting a dark shadow over an industry plagued with offensives from foreign-affiliated life insurers.

The company's illegal withholding of policy payouts is also a serious problem that rocks the very foundation of the life insurance industry, many industry analysts point out.

"We have opened up Pandora's box," a Meiji Yasuda executive said with a sigh. The company was inaugurated in 2002 through a merger between Meiji Life Insurance Co. and Yasuda Mutual Life Insurance Co.

It has become a top-class domestic life insurance company, but the successive scandals are a reflection of a fight for leadership peculiar to a merged company, the analysts said.

Industry sources said the Meiji side, proud of its roots as a "long-established" company, rushed headlong into pursuing a target to improve the new insurer's profitability, but there is a limit to how much it can increase new contracts.

Therefore, the sources said, the company tried to secure profits by making the standard for claims payments stricter. "Female sales employees are returning with tears in their eyes every day (because of the reactions from clients). The rank-and-file employees are not trusting top management," said a senior official at a Meiji Yasuda branch.

Immediately after the first scandal broke in February, new contracts decreased 60 percent from the year before. Contracts will also certainly drop this time, with the effectiveness of "apology tours" by top executives being seriously questioned.

The claims nonpayment cases that arose in February were regarded as "extremely special" because the company abused a clause that allows an insurer not to pay out policyholders who had concluded contracts but who had allegedly concealed illnesses in a bid to swindle money.

But the cases that emerged this time are of a different nature, becoming more general. For example, Meiji Yasuda failed to pay insurance money in such cases as the death of someone who had stumbled and fallen down a stairs in a condominium complex while drunk and a driver who died in a collision with an oncoming car after making a right turn onto another road, saying they were seriously negligent.

Therefore, the Financial Services Agency is paying special attention to the new cases and is poised to investigate them to determine whether it is an industrywide problem.

Should similar cases by other life insurance companies emerge, it is inevitable that trust in the industry as a whole will collapse, analysts said.

In February, the agency slapped Meiji Yasuda with a business suspension order. The second round of nonpayment cases was not fully revealed, however, until the FSA began monitoring the company's business improvement plan and conducted an on-site inspection in April.

To overcome severe competition, every domestic life insurer is in a desperate battle to develop its own products.

Because of this, differences have emerged in standards for benefit payments depending on companies. And fearing that such standards can be used for criminal purposes, companies do not make the details public, which leaves them hard for policyholders to understand.

So far, financial regulators had focused on clamping down on how insurers sell their products, including instructing them to explain the details in full to customers. The Meiji Yasuda case, however, shows there is much to be done in the area of regulating payouts.

But Life Insurance Association of Japan chief Ikuo Uno, who is also chairman of Nippon Life Insurance Co., has indicated reluctance toward reforming the industry, saying, "It is difficult to unify payment standards."

But analysts said the industry and the government need to join hands in reviewing the Insurance Business Law, because it has become insufficient to cope with new developments in the industry.