The government plans to lift all remaining restrictions on sales of insurance products at banks in spring 2007 now that life insurers appear set to drop their opposition to deregulation.

Life insurers signaled their intent to consent after agreeing to government proposals aimed at preventing abuses harmful to the companies as a result of deregulation.

The Financial Services Agency is in the final stages of negotiations with life insurers over the scope of insurance policies banks can handle ahead of full liberalization, as early as this July.

The FSA plans to allow banks to sell single premium endowment life insurance, whole-life insurance and savings-type personal accident insurance.

The agency had initially aimed to expand the types of insurance policies in April 2005 and lift all restrictions in April 2007, in line with a report submitted by the Financial System Council last year.

But the plan met with stiff opposition from major life insurers, which argued that banks would use their influence over borrowers to railroad insurance sales.

In response to the opposition, the FSA drew up several proposals, including limiting liberalization to savings-type products, which are not mainstay products at major life insurers, and strictly prohibiting unfair sales practices.

The agency also offered to add a clause in the ordinance that would postpone complete liberalization in the event abuse by banks cannot be effectively controlled.

The FSA has already prohibited banks from goading borrowers into buying insurance in exchange for loans.

The agency is considering additional regulations, including a ban on sales to small corporate borrowers.

Life insurers want to avoid a prolonged confrontation with financial regulators, and are expected to accept the proposals because they will minimize the impact of partial deregulation and leave the door open for further discussions on full liberalization.(IHT/Asahi: January 21,2005)