The Journal The Authority on Global Business in Japan

Risks of single-payment insurance policies  

A new source of revenue for regional banks may be under threat. Single-payment, foreign currency-based insurance that is payable at banks’ service counters is facing scrutiny from the Financial Services Agency (FSA).

The filing of successive complaints with the National Consumer Affairs Center of Japan prompted one FSA official to suggest sufficient explanations are not being provided concerning the risks of such products. And upon surveying 20 regional banks, the FSA determined that the number of policies sold had increased rapidly—nearly doubling in two years. This growth was particularly conspicuous considering the lower 1.2-fold growth at Japan’s nine megabanks.

The insurance in question is purchased by means of a one-time outlay, with the price tied to the value of the US dollar or other foreign currency. In addition to benefits being paid out should death occur during the coverage period, the operating revenues are also paid out when the period of coverage expires. Because the amount is based on the initial premium, these products can be considered investments.

The policies appeal to older individuals who have begun receiving their pensions, and are also considered an option for investing the bonus that is paid out to retiring company workers.

Sufficient consideration needs to be given to the viability of these policies as a means of support for those in their senior years. This point is made evident in pamphlets explaining that payout is only guaranteed in the original foreign currency, which may be affected by fluctuations in the exchange rate. As an FSA officials said, “Even professionals don’t know what the exchange rate will be 10 years from now, so it’s a high-risk product.”

In recent years, Japan’s regional banks have found themselves under the FSA’s disapproving glare over questionable practices related to credit-card loans, apartment loans, and other products. This scrutiny has led to a reduction in such activities, and history may soon repeat itself.

Ring Road No. 2 running through Tsukiji

Ministry of Land, Infrastructure, Transport and Tourism
Special highway surcharge during the Olympics

To reduce traffic during the Tokyo 2020 Olympic and Paralympic Games, the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) is consi­dering adop­tion of a road-pricing system that would raise tolls on the Tokyo Metropolitan Expressway from ¥500 to as high as ¥3,000.

MLIT and the Metropolitan Highway Corporation asked the Tokyo Organising Committee of the Olympic and Paralympic Games—as well as the Tokyo Metropolitan Government—to take the matter under consideration, but the two are said to have been unable to come up with any other concrete ideas.

In its bid, Tokyo pitched the concept of a “compact Olympics”—one in which the athletes staying at the Olympic Village would be able to access events in 10 minutes or less. Making this a reality, however, has proven difficult.

Ring Road No. 2—a 14-kilometer (8.7-mile) stretch connecting Ariake in Koto Ward and Kandasakuma-cho in Chiyoda Ward—will pass near the Olympic Village in Harumi, and the initial concept called for it to be made available only to athletes and participants of the Games, or to give them priority.

It was calculated that travel from the Olympic Village to Kasumigaseki would take about 10 minutes if an exclusive Olympic-use lane were designated on the regular thoroughfare. However, due partly to the delay in transferring the city’s main fish market from Tsukiji to Toyosu, the opening of the tunnel on Ring Road No. 2 has been delayed, forcing a rethink. And this brings us back to the ideas of higher tolls.

Planners realized two years ago that Ring Road No. 2 would not be completed in time for the Olympics, but the gov­ernment and organizing committee were unable to come up with anything better than an exclusive-use lane and price increase to discourage road use and decrease congestion—an idea some MLIT officials have complained about bitterly. 

Keizaikai magazine