Japan Post Insurance Co. is suspected of repeatedly engaging in inappropriate sales tactics on elderly customers and other policyholders, including encouraging them to cancel contracts and switch to new policies that were disadvantageous, sources said.

The number of such changeovers, which resulted in few advantages to the policyholders due to higher premiums or other factors, totaled about 5,800 in one month, they said.

It is believed that post office workers, who are in charge of sales of the company’s insurance policies, were encouraging the switches to fill quotas or improve their performance evaluations, they also said.

The government’s Financial Services Agency (FSA) is looking into the problem, they added.

Japan Post Insurance checked about 21,000 new contracts concluded in November 2018 in an in-house investigation.

As for about 5,800 of those contracts, the company judged that switching policies lacked financial sense for customers.

Policyholders are often urged to switch to new insurance policies when those products are put on sale or they review their existing policies.

Meanwhile, when they cancel existing contracts about halfway through their terms, the premiums that are returned to them tend to be smaller than the total they paid out.

In addition, the premiums for the new insurance policies may be higher.

The number of changeovers to new insurance policies has increased sharply since around autumn 2017 when these new products were put on sale.

To assess the circumstances of the changes, Japan Post Insurance chose about 300 cases from the 5,800 and interviewed the policyholders.

It found that there were numerous cases in which the policyholders did not understand the reasoning for the changeovers or that they could have obtained similar conditions to their new policies by attaching special conditions to their previous policies.

Similar instances could be found in new contracts concluded in months other than November.

Of clients who buy policies sold by Japan Post Insurance, about half are 60 or older.

The company entrusts sales of its insurance policies to post offices operated by Japan Post Co., another Japan Post group company, and pays commissions to them.

It is believed that the inappropriate sales are attributable to the excessive quotas that have been imposed on post office workers or that in their performance evaluations, importance is placed on the number of new contracts they obtained.

Allowances have also been paid to the employees based on the number of new contracts they acquired.

From April this year, Japan Post changed its method for performance evaluations of workers. It places importance on whether contracts concluded with policyholders are continuing rather than how many new contracts were obtained.

The firm also decided to refrain from soliciting people aged 80 or older for insurance policies.

As for switching to new insurance products that are disadvantageous for clients, Japan Post Insurance said, “In cases that new contracts are different from ones desired by policyholders, we are taking measures to return them to their previous policies.”

When post office workers concluded new contracts with clients, however, they asked them to sign documents that described the items that were disadvantageous for the clients. Therefore, Japan Post Insurance said that there were no procedural problems.

The company also confirmed that the 300 customers chosen to be interviewed understood and accepted the explanations for the changeover in contracts.

However, the FSA doubts that post office workers sold new insurance policies to benefit their customers.

It also is interested in how Japan Post Insurance and Japan Post has divided their roles and responsibilities. Japan Post Insurance and Japan Post, along with Japan Post Bank Co., operate under Japan Post Holdings Co.

(This article was written by Ayumi Shintaku and Shuhei Shibata.)