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3RD LD: Life insurers fail to pay 91 bil. yen in 1.2 mil. cases.

TOKYO, Oct. 5 Kyodo


Nonpayment of due insurance money by all 38 life insurance companies in Japan totaled 91 billion yen in about 1.2 million cases in the five years from fiscal 2001, according to final investigation reports submitted by some 19 life insurers to the Financial Services Agency Friday.

The total, which includes figures in interim reports by life insurers that have yet to conclude investigations and in final reports already filed with the agency, comes largely from 59.73 billion yen in 726,000 cases involving four leading insurers -- Nippon Life Insurance Co., Dai-ichi Mutual Life Insurance Co., Sumitomo Life Insurance Co. and Meiji Yasuda Life Insurance Co.

The massive nonpayment of insurance benefits and other due payments came into the open in 2005 when Meiji Yasuda Life was penalized by the FSA for undue refusal to pay insurance money.

The financial industry watchdog then ordered the 38 insurers to carry out in-house investigations into missing payouts.

The initial investigations revealed 1,500 cases totaling 7.2 billion yen as the insurers reviewed only their past refusal to make insurance payments.

Unsatisfied with the reports, the FSA ordered the 38 companies in February to expand the scope of investigations to other cases such as nonpayments without claims from policyholders, which often involve claims for benefits available under rider portions.

In April, the 38 insurers submitted interim reports to the FSA, saying that their payment failures during the five years totaled 35.9 billion yen in 440,000 cases.

The total included 200,000 nonpayment cases worth 16.3 billion yen on the part of the top four insurers.

Industry-wide payment failures have increased 2.5 times in both number and value from the interim reports as a result of continued in-house investigations in the intervening six months.

As far as the industry leaders are concerned, the number and value of nonpayments have more than trebled.

The steep increase stems largely from additions of cases in which the insurers failed to make payments to holders of policies that became invalid due to the nonpayment of premiums.

As premiums paid before invalidation are partially returned to policyholders, insurers notify them of refunds by mail or phone. But the notice tends to be neglected because refunds amount to only several hundred to thousand yen, according to industry officials.

Attributing the massive nonpayment cases to the ''neglect'' of invalidated policies, Nippon Life President Kunie Okamoto said at a press conference, ''We, as insurance professionals, should have paid much more attention'' to policyholders.

Now that most life insures have wrapped up investigations, the FSA will study administrative action against them.

Life insurers, for their part, will work out measures to prevent a recurrence of payment failures, including penalties against responsible officials.
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Publication:Japan Weekly Monitor
Date:Oct 6, 2007
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