Press Conference by Yuji Yamamoto, Minister for Financial Services

(Excerpt)

December 12, 2006

Q.

Last Friday, all non-life insurance companies reported to the Financial Services Agency (FSA) about their respective deadlines for the third report on non-payment cases. I would like to hear the Minister's view on the deadlines they have set and how, among other things, these particular non-payment cases have been laid out.

A.

Just recently, on November 17, from the standpoint of prompting them to look into cases of missed payments of ancillary insurance claims and to make additional payments to the insured, etc., we requested that non-life insurance companies report by Friday, December 8 matters including the timing of the completion of their final inquiry and all of them did submitted such a report. While we will scrutinize the content of their reports, I would also like to see them act responsibly, based on their respective management decisions, in their efforts to unravel the whole scope of non-payment cases and pay insurance claims to the insured, etc. in accordance with the inquiry completion timeframe that they have set. When these respective deadlines come, the latest one being scheduled for the end of April, I hope to receive reports that the six major companies have thoroughly made their payments, and also expect to hear from them as to the grounds on which such actions were taken and what improvements have been made.

Q.

Moving on to the subject of the preferential treatment under the securities tax regime, could I please have your opinion on the conclusion that the LDP Research Commission on the Tax System seems to have reached, which approves the extension of the preferential treatment by one year?

A.

Having, regrettably, faced a criticism from the Minister of Finance this morning, who expressed great dissatisfaction as to this development, I still believe that we have secured his understanding about such matters as the status of our current economy and effects on stock prices etc. and, on our part, we have no intention of opposing the idea of harmonized taxation of financial income and are also actually prepared to examine it diligently should it be chosen as a direction for the future. As, however, I also find that the idea of harmonized taxation of financial income is a factor that should not be ignored from the standpoints of maintaining Japan's equal footing with other countries, maintaining international competitiveness, and maintaining Japan's status as Asia's financial center, I value sending messages, open messages, to the markets on repeated occasions in the future, together with this very welcome outcome of the 10% tax rate extension.

Q.

I would like to hear your views on the recent discovery that major non-life insurance companies were charging too much in insurance premiums for 2x4 houses, and while I heard the commissioner say in his press conference that the FSA would deal with this issue within the cycle of regular inspection and supervision, I wonder if, from the perspective of policyholder protection, it might possibly be better dealt with by conducting interviews, etc. What is your position on this matter?

A.

One way or another, I find regrettable the fact that such mistakes were being made at customer service counters in such a basic component of insurance, namely, charging excessive premiums. While this is not a case of non-payment, I still want the companies to devise ways to steadfastly improve their basic management practices, granted that such an improvement effort is not a requirement under any business improvement order. We are going to examine, in the course of regular inspections and supervision, whether or not their insurance sales management structures are formulated appropriately, including addressing the above-mentioned points. Furthermore, concerning your question about interviews, we are indeed likely to take such interviews. Above all, what I would rather like to ask of the insurance companies is that they proactively investigate such issues and serve their customers in an appropriate fashion, which among other things necessitates taking into account the matters of concern for our inspections and supervision.

(End)