WASHINGTON, April 4 /PRNewswire/ -- Frank Keating, President and CEO of
the American Council of Life Insurers, issued the following statement today on
the release of the government of Japan's postal privatization outline titled,
"Regarding Postal Privatization Legislation."
"The ACLI is both encouraged and cautiously concerned regarding the
release of the government's legislative outline regarding postal
privatization.
"ACLI is encouraged to find embodied in the outline the concept of 'equal
footing' in the marketplace for financial services. As ACLI has indicated
previously, this concept means that the new postal insurance entity will be
governed by the same laws and regulations, and under the same regulator, as
the private sector. No government guarantees should apply to any insurance
policies issued by the new insurance entity. Taxes paid by the new entity
should be the same as those which apply to the private sector. A safety-net
system should be mandated to which contributions will be made by the new
insurance entity on a par with the requirements faced by the private sector.
Cross-subsidies that are forbidden to private sector insurers should be
prohibited to the new entity, as well. Finally, to prevent abuse of a
dominant competitive position, there should be effective recognition and
regulation of the market power inherited by the new postal insurance entity.
"It is our hope and expectation that these concepts, inherent in the term
'equal footing,' will be included in the final legislation.
"At the same time, ACLI remains concerned over unresolved questions that
are actually key to attaining 'equal footing.'
"First, it is key that the legislation specify that no new or modified
product offerings may be made until 'equal footing' is achieved. Clear
benchmarks should be established for determining this status, and a
transparent process created in which Japanese and U.S. private sector
insurance companies have a meaningful opportunity to participate. This is
essential to avoid a situation in which the private sector sustains damaging
market loss during the period in which equal footing is being attained because
of longstanding competitive advantages accrued by Japan Post.
"Second is the issue of transparency. It is essential that there be full
disclosure of the accounts of all the postal entities created under the
legislation to ensure that subsidies benefiting the new postal insurance
entity from within the postal group do not occur. This need for transparency
also includes the disbursement activities of the proposed Regional-Social
Contribution Fund."
The American Council of Life Insurers (ACLI) is a Washington, D.C.-based
trade association whose 354 member companies account for nearly 75 percent of
the life insurance industry's total assets. ACLI member companies offer life
insurance, annuities, pensions, long-term care insurance, disability income
insurance and other retirement and financial protection products. ACLI's
public Web site can be accessed at http://www.acli.com.
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