A report by a panel of lawyers probing the inappropriate sales of Japan Post Insurance Co. insurance policies sheds light on an extremely serious problem in which priority was given to achieving sales targets at the cost of customer interest. In the five years to 2018, some 156,000 Japan Post Insurance customers signed 183,000 contracts that may have harmed their interest, and violation of relevant laws or in-house rules by sales staff — such as giving customers false explanations or getting elderly customers to sign contracts without the presence of their family members — were suspected in nearly 13,000 cases. The probe confirmed that either laws were violated or in-house rules were breached in 670 of the cases, but the figure is deemed to represent only a tip of the iceberg.
In most of the cases, salespersons at Japan Post Co., which sells Japan Post Insurance products at post offices nationwide, are said to have led wealthy elderly customers to buy new insurance policies while retaining their old contracts for some time — so that the staff would get higher credit for their sales performance — resulting in the customers making double payments on insurance premiums. More than 70 percent of the customers who signed the questionable contracts were 60 or older.
The panel's report blamed the problem on a tendency within Japan Post and Japan Post Insurance to "condone or justify inappropriate sales" to achieve the demanding sales targets imposed on post offices, sections and individual sales staff. Both firms cannot escape criticism that the improper practices were continued in an organized manner. While the resignation of top executives at both the companies and their parent, Japan Post Holdings, is expected and the Financial Services Agency weighs penalties on the firms, such as suspension of their insurance policy sales, the governance system of the whole group needs to be overhauled to establish a mechanism with checks against illicit business practices.