A Liberal Democratic Party panel gave the green light Wednesday to a proposal by the Financial Services Agency to tighten its supervision of insurance companies, starting with the March book-closing.
Under the proposal, the FSA wants tougher rules on calculating the solvency margin ratio -- a gauge for insurers' financial health -- and to require them to release end-of-March figures.
The new rules demand that the ratio reflect valuation profits or losses on holdings of domestic stocks and bonds, foreign stocks and bonds, unlisted stocks and land.
The FSA also wants insurers to disclose the ratio every six months, beginning with the next business year.
To supplement the ratio in checking their financial conditions, the agency is calling for the disclosure of net business profits from core insurance operations, calculated by subtracting gains or losses from securities sales and extraordinary profits or losses from pretax profits.
The agency will also demand policy reserves for so-called third-sector products, which both life and nonlife insurers will be permitted to offer from July, so that they will not make excessive discounts on such policies.
To prevent fraud, nonlife insurers will be obliged to report on existing contracts to authorities as life insurers are now required to do.
During the day's meeting, LDP members also agreed to set up a subcommittee on life insurance matters that will, among other things, look into the issue of whether to allow ailing life insurers to reduce the yields they promised to policyholders.