Press Conference by the Minister for Financial Services

(Excerpt)

September 30 , 2005

Minister's Statement

It is truly regrettable that there proved to be many cases in which non-life insurance companies need to make additional payments of ancillary insurance claims such as extra expense claims. In response to this situation, the Financial Services Agency (FSA) has decided to order all non-life insurance companies today to report the number of cases in which such additional payments are needed, the progress of the payments, an analysis of the causes of such additional payments becoming necessary and measures to prevent the recurrence of such cases.

As for the reasons, it is important that non-life insurance companies first strive to establish proper management functions for insurance claim payments of their own accord with respect to the case. While they have been voluntarily conducting verification, the FSA decided to order all non-life insurance companies to report at once, in order to ensure uniform and comprehensive efforts in dealing with this problem.

Regarding detailed matters, please ask the Insurance Business Division of the Supervisory Bureau.

Q & A

Q.

In what form will you release or publish the results regarding the report order to non-life insurance companies?

A.

We assume that the companies should submit the reports within two weeks or so, no later than October 14. As the companies are voluntarily conducting inspection and verification and publishing some of the results, we can receive the reports within about two weeks, by October 14. Then we plan to scrutinize the received reports and to publish them in some form.

Q.

The life insurance companies were required to report cases dating back five years. Did you set such a period in the case of non-life companies?

A.

We assume that the period will be three years. Under the provisions of the current Commercial Code, a right of claim is valid for two years, so just to make sure policyholders will be protected, non-life insurance companies should conduct verification targeting a period of three years.

Q.

Today is the deadline for the inspection reports on similar non-payments by life insurance companies. How does the FSA plan to publish the results?

A.

As today is the deadline, we assume that the reports will be submitted by the companies today. We will scrutinize the received reports and publish them in some form.

Q.

The revision of the Banking Law was approved by the Liberal Democratic Party's subcommittee yesterday. As the bill is expected to be submitted soon, what is your outlook on deliberations and your hopes?

A.

Having gained the approval for the bill from the members of the ruling parties yesterday, we will strive to have the bill submitted to the Diet next week.

Q.

Will non-life insurance companies be given the report order today?

A.

Yes, it will be done today.

Q.

How many companies will be subject to the order?

A.

Regarding the detailed number, I would like to answer accurately, so I will direct the division in charge to do so.

Q.

Yesterday, Mr. Toshihiko Fukui, the Governor of the Bank of Japan, mentioned discontinuing the quantitative relaxation policy by the end of the year. What are your thoughts, including your view on the current macro economy?

A.

As monetary policy itself is in the jurisdiction of the Bank of Japan, the government and the Bank of Japan must be united in properly managing the macro economy in a precise fashion in the days ahead. This question is about quantitative relaxation and other related matters, which are also in the jurisdiction of the Bank of Japan, so they will be examined by the Bank of Japan under Mr. Fukui. It is extremely important for the government to overcome deflation and ensure economic growth led by the private sector, so at the risk of sounding repetitive, we must manage the macro economy in a precise fashion in cooperation with the Bank of Japan.

(End)

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