Asian News - Japan: Major banks to reveal commissions received from insurers
Source: Asia Insurance Review | Aug 2016
Japan’s five largest banks could voluntarily reveal how much commission they receive from insurance companies for selling the latter’s policies as early as the beginning of 2017, to enhance transparency.
Single-premium and regular-premium life insurance plans accounted for 41% of sales commissions earned by banks in the first half of the fiscal year ended 31 March 2016, compared with 31% in FY2012-13. Mutual funds, on the other hand, dropped from 62% to 53% over the same period, reported The Nikkei.
Sales of insurance policies denominated in foreign currencies, which offer relatively high yields, have gained ground in recent years. Banks on average receive commission of nearly 7% for selling these plans, compared with the roughly 2% for mutual funds, according to data presented by the Financial Services Agency (FSA). The agency is concerned that higher commissions are pushing banks to sell more foreign-currency-denominated insurance.
Banks and LIAJ prepare to disclose commissions
In light of such concerns, Bank of Tokyo-Mitsubishi UFJ, Mizuho Bank, Sumitomo Mitsui Banking Corp, Resona Group and Sumitomo Mitsui Trust Bank are considering making their commission schedules public as early as next year, even though the FSA has not reached a decision on the matter. They are looking into placing brochures on bank counters, as well as offering explanations by salespeople at their branches.
In response to concerns from the regulators, the Life Insurance Association of Japan was preparing to disclose commissions on variable insurance plans – where policyholders receive different payouts each year based on market conditions -- and foreign-denominated policies in October.