Life insurers can no longer afford to keep funding the safety net of the Life Insurance Policyholders Protection Corp., which makes payments for failed insurers, a top industry official said Friday.
Ryotaro Kaneko, chairman of the Life Insurance Association of Japan, told a news conference that insurance companies "are not in the financial state to enable them to put up any more contributions" to replenish the mechanism's dwindling funds.
Life insurers are required to honor insurance obligations owed by failed insurers, up to a combined 560 billion yen.
The payment-guarantee regime was set up in 1998. The government is legally empowered to put up 400 billion yen from state coffers if the insurers' own joint reserves dry up. But the government's legal power to replenish the reserves is set to expire March 31, 2003.
The industry has so far covered 540 billion yen owed by several insurers that went belly-up in recent years.
Kaneko told reporters that the government must consider putting off the expiration date for the use of public funds to honor the obligations of failed insurers.