The Financial Services Agency on Thursday ordered Sompo Japan Insurance Inc. to suspend most of its operations for two weeks at all of its offices nationwide for illegal sales practices.

It is the third time the financial watchdog has punished the major casualty insurer. Last November, the FSA ordered Sompo Japan and 25 other nonlife insurers to make improvements after failing to pay legitimate insurance claims. A similar order was issued in August 2002.

On Thursday, the FSA ordered a two-week suspension from June 12 at all Sompo Japan offices, banning it from sales and advertising of its mainstay nonlife policies.

Policies that come up for automatic renewal during the suspension period are excluded, as are mandatory insurance products for drivers.

Sales of Sompo Japan life insurance products offered through its partners will also be suspended.

Under the ban, Sompo Japan cannot sell life insurance products for one month starting June 12. For three months starting Friday, the government will not issue licenses for the firm to sell new insurance products and bar it from altering its current products, or establishing new subsidiaries or offices overseas.

Sompo Japan has admitted it rejected 27,273 claims worth some 900 million yen. Of these, the FSA, during its August-March inspections, found that the company withheld legitimate payouts worth 120 million yen in 1,128 cases.

The FSA also said Sompo Japan failed to pay 25.7 million yen in an additional 206 cases for policies covering passengers hurt in car accidents.

Other illicit practices include Sompo Japan salespeople pretending to have sold nonlife insurance policies by paying the premiums on the products themselves in order to meet sales targets imposed by the company.

The FSA said staff faced “an excessive sales target.” Sompo Japan President Hiroshi Hirano later e-mailed branch managers pressuring them to meet the target.

“I urge you to be strongly committed to achieving the sales target for this year,” Hirano’s e-mail said, according to an FSA official who briefed reporters.

At a branch in Yamaguchi Prefecture, sales staff illegally used seals with the same names as existing customers to renew their insurance contracts without consent. The staff kept a large number of such seals at the branch.

There were 23 such violations of the Insurance Business Law, the FSA said.

The Yamaguchi branch workers also used the seals in new insurance contracts without getting final consent from customers in 2,947 cases.

The company was ordered to suspend its business in areas covered by the Yamaguchi branch for a month starting June 12.

After the FSA announced plans to inspect the branch, the manager threw away a huge number of seals.

The FSA order came a day after Hirano announced he will be replaced as president by Masatoshi Sato, the firm’s managing director, and will assume the post of chairman. Hirano claimed the reshuffle has nothing to do with the FSA investigation.

The FSA ordered the company to draw up and submit a report detailing the steps it will take to improve its practices by June 26 over the failure to pay legitimate claims, and submit a followup report every three months thereafter.