A Liberal Democratic Party panel on financial affairs held off Friday from formally endorsing proposals to set up a new body offering protection to insurance policyholders in the event of an insurer's collapse.

The delay stemmed from some panel members' desire to see more concrete assurances that the government would inject public funds into the body if necessary. The proposal, part of a comprehensive bill on financial system reform expected to be submitted to the Diet by March 10, calls for the new body to fully compensate most insurance policies up to the end of March 2001.

If it falls short of funds during this time, it would, with the backing of government guarantees, be allowed to borrow money from the Bank of Japan, according to the plan. But some LDP lawmakers demanded additional assurances that insurance contracts would be protected, with some suggesting the bill state more clearly that public funds might be used to support this protective framework.

They pointed out that the Deposit Insurance Corp., which covers bank deposits, was given 10 trillion yen worth of government bonds that could be converted into cash upon request if needed to carry out the government's pledge to protect all bank deposits up to March 2001.

In contrast, there was no basic disagreement regarding the use of public funds in the form of government guarantees and Bank of Japan loans to support a fund to protect investors at failed securities firms.