Insurance a key target in trade battle with Japan

January 21, 1994|By New York Times News Service

TOKYO -- The volume in the angry trade dispute between the United States and Japan was turned up another notch yesterday, this time with the Japanese insurance industry vigorously denying that it is closed and countering that the U.S. market goes further in discriminating against foreign competition.

Japan has the second-largest insurance market in the world, but American companies have complained for years that rigid government regulations and tight links between industrial concerns and financial companies effectively blocked access for foreign competitors.

Insurance has thus become one of the key industries the United States is trying to crack open -- along with automobiles and auto parts, medical equipment and telecommunications -- in time for a deal to be signed when Prime Minister Morihiro Hosokawa meets President Clinton in Washington on Feb. 11.

In recent days, however, Japanese officials, government advisory groups and business leaders waged an increasingly tough war of words.

Yesterday, Takashi Onoda, chairman of the Marine and Fire Insurance Association of Japan, issued a paper attacking the United States for keeping its insurance market closed and for trying to unfairly protect the strong position of some American insurers in several market niches.

But American companies say they are being kept from a gold mine in premiums in Japan.

Japan's property- and casualty-insurance market is about a third the size of that in the United States, but its life insurance market is larger.

One of the major problems is that because of burdensome regulations, foreign companies find it difficult to win business in Japan by offering innovative products or cutting premiums.

In addition, the top 10 Japanese insurance companies control about 80 percent of the business, compared with about 30 percent in the United States. That concentration, and the tight financial ties between insurers and industrial concerns, all but block the foreigners from competing, Washington maintains.

Mr. Onoda insisted yesterday that the American companies were not trying hard enough to sell policies in Japan.

"The United States is making one-sided demands based upon an inadequate understanding of the Japanese insurance market," he said.

"If they insist on not discussing problems in the United States, which we think is contained in the principle of two-way talks, the Japanese government should not compromise," he said.

His association has said that the splintered American regulatory system -- each state has its own regulations, and rules in some areas require that brokers be fingerprinted -- must be changed.

The U.S. side is demanding liberalized rules on offering new insurance products in Japan, rules permitting agents to sell policies from more than one insurance company and, perhaps most important, measures to break the grip that insurers have on selling policies to members of their keiretsu, or industrial groupings.

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