These inappropriate sales of life insurance must be described as a case of insufficient awareness regarding corporate social responsibility.
The Japan Post Group has unveiled an interim report on investigations into contracts inappropriately formed with customers by one of its arms, Japan Post Insurance Co.
More than 6,300 contracts are suspected to have been signed in violation of the Insurance Business Law and other ordinances, as well as in-house regulations, over the past five years. Of the total, there are about 1,400 cases involving legal violations. The situation is serious.
In fiscal 2018, the insurance company reported only 22 cases of ordinance violations to the Financial Services Agency. The company must be inevitably suspected of deliberately covering up such offenses.
The violations include many cases in which, when switching to new insurance contracts, customers were forced to make duplicate premium payments after being falsely told, for example, that there is a rule under which customers are not allowed to cancel contracts for six months. There was also a succession of cases in which elderly people were urged in a coercive manner to take out insurance.
Of the policyholders that could be contacted during a two-month period following the start of investigations, about 26,000 persons have demanded they get a refund or have their initial contracts reinstated. As major reasons for these demands, they cited excessive premium payments and switches to comparatively expensive insurance products. The insurance company must swiftly respond to their demands.
The interim report has confirmed the details of only about 68,000 of about 183,000 contracts deemed to be problematic. Concurrently with its investigation into these cases, the Japan Post Group is proceeding with research concerning all contracts that have been formed. Some regard the latest results as the tip of the iceberg.
It is necessary to rapidly uncover the whole truth behind the problem.
Separately from the in-house research, a special investigation commission comprising external lawyers has issued a report on the present state of affairs. The panel has said corporate governance was not functioning at the Japan Post Group. It also regarded as a problem the fact that the company had imposed quotas not commensurate with the abilities of personnel actually engaged in insurance sales.
"Unless information reaches [management] from below, nothing can be done at all," Japan Post Holdings Co. President Masatsugu Nagato said at a press conference. His remark itself shows corporate governance is not functioning in his group.
Top executives at the group are greatly responsible for failing to notice the severe circumstances facing personnel engaged in selling insurance.
The group has decided to postpone resuming the sale of Japan Post Insurance products until next January or later, although it was initially scheduled to do so in October. It has every reason to postpone. Cases of inappropriate sales of investment trust funds to elderly people have also been discovered at Japan Post Bank Co., another arm of the group. First and foremost, preventive measures must be thoroughly implemented.
Nagato avoided clearly stating whether he will resign, saying, "Our responsibility as top officials is devoting ourselves wholeheartedly to restoring trust." He does not appear determined to clarify his responsibility and start over again.
In September, the FSA conducted on-the-spot inspections related to this issue. It is said to be considering imposing an administrative punishment, such as issuing a business improvement order. The problem must be dealt with sternly, as doing so is also necessary for ensuring "customer-first" operations thoroughly prevail in financial circles as a whole, a goal the FSA is pursuing.
(From The Yomiuri Shimbun, Oct. 6, 2019)
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