The Yomiuri ShimbunBusiness operations that disadvantage customers must never happen in the first place. Japan Post Insurance Co. should fundamentally overhaul its management system and thoroughly ensure it protects its customers’ interests.
Japan Post Insurance and Japan Post Co., which are under the umbrella of Japan Post Holdings Co., have apologized after admitting that some customers were given inappropriate contracts when switching insurance policies. More than 90,000 contracts are suspected of not benefitting customers.
Japan Post Insurance will establish a third-party panel formed of lawyers and others to investigate the situation. The whole truth of the matter must quickly be uncovered.
According to Japan Post Insurance and other sources, there were about 22,000 cases in which customers made double payments of insurance premiums for their new and old policies. It also has been revealed that in about 47,000 cases, customers were not covered by insurance for four to six months — the time between the old contract being canceled and the new contract being concluded.
Japan Post Insurance President Mitsuhiko Uehira said, “We couldn’t make new contracts completely from a customer-oriented perspective.”
Even when employees concluded new contracts with customers, if the previous contract had been canceled within six months, the new contract would be considered a “changeover.” Consequently, the sales incentive given to the employee and their sales performance evaluation would be half that for a new contract. To prevent this, employees are suspected of intentionally delaying the timing of contract cancellations and having clients bound by old and new contracts at the same time.
It would be disgraceful if post office workers, who sell the company’s insurance policies, did indeed repeatedly conclude contracts disadvantageous to customers so they could achieve their sales targets.
Japan Post is offsetting its tapering income from postal operations through commissions paid by Japan Post Insurance and Japan Post Bank, which entrust sales of their policies to post offices. It seems the rampancy of these inappropriate contracts came against a backdrop in which the emphasis on sales quotas went too far.
Last month, it was revealed Japan Post Bank had been selling investment trusts to elderly customers, in violation of its own rules. Serious questions are being raised about the governance of the entire Japan Post Holdings group. The senior management team that failed to take effective corrective steps bears an extremely heavy responsibility for these problems.
Japan Post Holdings is backed by the central government’s credit. Conducting unsuitable business operations under such a situation is unscrupulous.
The company’s shabby response after the problem was pointed out in June also cannot be overlooked. Japan Post Insurance and others initially denied any wrongdoing, saying there “were no law violations.” The delay in handling the issue at this early stage seriously hurt trust in the company.
Customers who ended up with double contracts will have the excess premiums they paid refunded. Japan Post Insurance will stop sales operations that recommend customers switch policies and also lower sales targets.
Every effort must be made to prevent any recurrence and provide relief to affected customers. It will be essential to resolutely carry out a drastic change in awareness on this issue, from the top management right through to the employees working on the front lines.
In 2017, the Financial Services Agency compiled principles for customer-oriented business operations and has called on financial institutions to sell suitable products to clients. The agency should take this latest incident seriously and consider a strict response, including administrative penalties.