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The Financial Services Agency is considering ordering Mitsui Sumitomo Insurance Co. to suspend sales of nonlife insurance policies as well as medical insurance products at all of its outlets for about two weeks as punishment for its nonpayment of insurance claims, FSA sources said Tuesday.

The FSA also won’t authorize any new insurance products for Mitsui Sumitomo until it confirms that it has improved its internal supervision system, the sources said.

An FSA probe conducted between November and February uncovered Mitsui Sumitomo failed to pay insurance claims in at least 30,000 cases, they said.

Last fall, the insurer said it failed to pay claims in about 27,000 cases from 2002 through 2005.

The FSA probe found at least 3,000 more cases of insurance claim nonpayment.

The FSA believes Mitsui Sumitomo has serious administrative flaws, the sources said.

Mitsui Sumitomo may consider penalizing executives, possibly including Chairman Takeo Inokuchi and President Hiroyuki Umemura, who is scheduled to step down in any case, company sources said.

Toshiaki Egashira, the incoming president to replace Umemura, was expected to become chairman of the General Insurance Association of Japan. But he is now unlikely to assume the post.

The Mitsui Sumitomo case is the latest in a string of scandals in which insurers refused to pay legitimate claims or were found to have carried out other dubious operations.

Earlier this month, Sompo Japan Insurance Inc. President Hiroshi Hirano resigned after the FSA imposed a two-week business suspension order on the firm for similar reasons.

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