The American Chamber of Commerce in Japan on Friday urged the government not to allow life insurance companies to cut their guaranteed yields on outstanding individual life insurance policies.

The ACCJ made the request amid calls from some lawmakers for such a cut against the backdrop of difficulties facing major life insurers in meeting their guaranteed yields, as their investment returns fall short amid record-low interest rates.

In a report prepared by its insurance subcommittee, the ACCJ says such a rate cut would "run contrary to free market principles of allowing parties to freely enter into and rely upon business contracts."

The ACCJ also warned that a cut in such guaranteed yields, or assumed interest rates, would have adverse effects on the insurance market, saying potential policyholders could not be sure whether or when the government might again intervene and change their policy terms.

The ACCJ also took issue with such a rate cut as a step that could discriminate against foreign businesses.

"The interest rate cut is likely to discriminate against foreign companies and skew the competitive field in the Japanese insurance market," it said.

If such a rate cut is limited to mutual companies like most Japanese life insurers, the ACCJ said, branches and local subsidiaries of foreign companies would be exempted with the burden of high-interest policies left.