Disagreements flared Wednesday as Japanese and U.S. officials entered their second day of talks to discuss the progress of bilateral insurance agreements.

Officials of the U.S. Trade Representative's office expressed concerns that a product of the life insurance subsidiary of Tokio Marine & Fire Insurance Co. violates the 1996 accord, Finance Ministry officials said.

The accord prohibits life insurance subsidiaries of Japanese nonlife insurers from selling "third sector" products such as stand-alone cancer insurance, until 2001. The regulation was formed to protect U.S. insurers in markets here until the primary insurance sectors, where life insurance and auto insurance belong, are fully liberalized.

American negotiators in Tokyo told their Japanese counterparts that life insurance with a cancer rider being marketed by Tokio Marine Life Insurance Co. has had a large impact on the third sector and thus runs counter to the purpose of the agreement, according to the ministry officials.

The Japanese side demanded the Americans prove the alleged violation, the officials said. Tokio Marine Life Insurance's cancer rider sets the amount of insurance within rates agreed to by both governments.

Summarizing the two days of discussions, the Japanese delegates said the U.S. interprets the 1996 agreement in a distorted manner or simply fails to see the facts correctly.

Specific comments from the U.S. side were not immediately available, but a press statement said the U.S. expresses deep concerns about deregulation in the primary sectors and Japanese insurers' activity in the third sector.