* Written by PPPC Visiting Fellow
On January 16, the Financial Services Agency announced revisions of
guideline of supervision over insurance companies as public comment.
The news gave a huge impact on the insurance industry, though it had
been partly rumored.
To explain it in a simple way, in short, it is that the Financial
Services Agency stated explicitly that it is “illegal” that
insurance companies delegate sales of insurance goods to insurance
agencies or re-delegate to independent agents (like self-foreman in
construction industry) with whom insurance companies or agencies do
not have direct labor contracts, according to provisions of the
Insurance Business Act.
Furthermore, the Financial Services Agency states that it would no
longer allow insurance companies and agencies to delegate sales and
advertisement of insurance goods by literally implementing the law,
and pressured insurance companies and agencies to have direct
employment relationships with such agents if they wanted to keep
delegating/re-delegating sales of insurance goods.
In recent years, there has been an expansion of insurance agency
business (such as “insurance window”) that handles multiple
insurance goods, but it was in fact backed up by this sort of
re-delegation agencies. This time’s revision of guideline is meant
to eradicate this type of business.
On this revision, the Financial Services Agency explains that it is
based on the report of working group with regard to provision of
insurance goods and services in the Monetary Council released in June
2013, and it was decided as part of revision of rules of
advertisements and sales of insurance goods.
However, actually looking at the report, it could be implied as a
suggestion toward strengthening monitoring over the agents (compulsory
report, on-the-spot inspection, etc.) as well as enhancing training on
employees who engage in insurance businesses irrespective of
employment relationships (in other words, not necessarily demanding to
make direct employment contracts as regular employees).
Nevertheless, this time, the Financial Services Agency has shifted
its direction suddenly to prohibit all kinds of re-delegation agencies
accordingly with the basic principle.
On this policy shift, many scream in alarm at sites. A young agent
says “I have worked with pride as an independent business agent,
rather than as an employee of agency, since I left a major insurance
company. It is so unfortunate that this will no longer be authorized.
It is difficult to start up an official agency with the current
business scale, so I must find a job in other agents.”
In the background of expansion of re-delegation agencies, in the
first place, there was a deregulation in 2000 regarding “employees”
engaging in damage insurance business that deleted a sentence saying
“employment relationship with agents” as its condition; it was
according to requests from the insurance industry to expand the scope
for temp labors.
Although there was no such provision regarding life insurance, the
same idea has been applied and it has regarded not only the temp
labors but re-delegated agents as “employees” and many agencies have
delegated advertisements and sales of insurance goods to such
The authority’s view would probably be that it is necessary to have
a regular employment relationship with agents in order to keep every
employee under thorough training, instruction and supervision, though
obviously visible problems have yet to be made tangible.
However, it seems that there should have been other alternative
measures to support training, instruction and supervision over such
re-delegated agents. To make them “salaried workers” is not the only
way. A vision of insurance agent working with pride as an independent
entrepreneur should have been sought.
entrepreneur should have been sought.