As the date for comprehensive sales at banks nears, dissenting voices are growing louder.

Life insurers' date with destiny has arrived. And guess what? They don't intend to accept deregulation quietly.

Major life insurance companies are complaining long and hard about the government plan to remove all remaining barriers for banks to sell insurance products.

The banks' nationwide branches represent a formidable sales force that insurance industry leaders say will rapidly steal their business.

It's a sticky situation for government officials, who thought they had finally cleared the rough water in a 10-year campaign to dismantle market barriers in the financial sector.

Insurance was supposed to be the triumphant finale for the Big Bang deregulation program.

Despite howls of protests, the securities industry eventually agreed to play ball.

In December, banks will begin handling securities transactions on behalf of brokerages, bringing down one of the last regulatory walls separating banks and brokerages.

According to the Financial Services Agency script, insurance is next in line.

In April, banks are slated to be allowed to handle a broader range of insurance products. By April 2007, all restrictions are due to be lifted, and banks are supposed to be competing in earnest with insurance companies.

In hindsight, it was probably too good to be true.

Things turned sour this summer after Nippon Life Insurance Co. President Ikuo Uno was appointed as chairman of the Life Insurance Association of Japan.

Uno visited FSA Commissioner Hirofumi Gomi in August to protest the lifting of all controls against banks' insurance sales.

At a news conference earlier this month, Uno reiterated that the industry is dead set against the FSA's plan, citing the lack of a mechanism to bar banks from using their influence as creditors and pressuring borrowers to take out insurance policies from them.

He also warned that the partial deregulation scheduled for April ``could be delayed.''

The life insurance industry opposed the government's financial deregulation program from the start.

In earlier rounds of phased liberalization in 2001 and 2002, the government allowed banks to sell some types of insurance products, including defined-contribution annuities, but industry officials expected the wheels to eventually fall off the reform bandwagon.

In March, however, the Financial System Council, an advisory panel to the prime minister, produced a final verdict, calling for the sales ban to be scrapped altogether in April 2007.

Now that change is upon them, industry officials have switched to kicking-and-screaming mode.

``Life insurers may often be in disagreement, but this time we're united to wage an all-out war against removing the ban,'' said a director of a major life insurer.

If banks are allowed to provide comprehensive financial services, including securities and insurance, ``we could be reduced to mere subcontractors,'' complains a top executive of another major life insurer.

Spelling out their reform fears, the major life insurers point to defined-contribution annuities. Banks were allowed to handle these insurance products in October 2002, and sales in the year through March grew about 75 percent from 957.6 billion yen a year earlier.

To the chagrin of industry leaders, key beneficiaries of the partial deregulation are foreign life insurers and life insurance subsidiaries set up by nonlife insurers, who have used the banks to gain access to markets that were previously out of reach.

If the reforms go ahead, large life insurers may have to slash a combined sales force that totals 260,000, observers say.

Gomi says the FSA will ``basically'' respect the Financial System Council's recommendations, indicating the final goal remains the lifting of all restrictions on insurance sales at banks.

Still, some government officials say the life insurance industry's strong political leverage could force a delay to the deregulation schedule.

A group of Liberal Democratic Party lawmakers, headed by former Foreign Minister Masahiko Komura, is firmly backing the stance of the Life Insurance Association of Japan.

The government has already decided to prohibit banks from forcing insurance policies as a condition for loans, but moves are afoot to appease jittery life insurers. FSA officials are considering additional steps to keep lenders from using their advantageous position over borrowers.

But analysts warn that if the financial regulators go overboard in reinforcing regulations, the efforts to make the life insurance industry more competitive could get watered down.(IHT/Asahi: October 27,2004) (10/27)