AFLAC: Allegation and Response

Today it’s AFLAC’s turn.

The Japan Times revealed that Japan Post “improperly sold around 104,000 insurance policies issued by U.S. partner Aflac Inc.”

The actions of Japan Post, which sells Aflac policies at post offices nationwide, resulted in customers becoming temporarily uninsured and or being double charged for a one-year period that ended in May this year, the sources said.

Japan Post halted sales of its own and third-party life insurance products after admitting in July to conducting inappropriate sales of around 183,000 policies and leaving customers at a disadvantage over the past five years.

It continues to sell Aflac’s cancer insurance products, however, treating them as an exception.

Aflac has long been a leader in cancer insurance in Japan. It signed a business partnership with Japan Post Holdings in 2013 and agreed last December to receive direct investment from Japan Post to expand their cooperation.

Under an arrangement with Aflac, a new customer cannot be insured for three months after he or she purchases the insurance to prevent a person who has already developed cancer from receiving a payout.

The rule caused people switching to a new Aflac insurance policy from an old one to pay for both contracts or be left without coverage for three months.

Since 2014, Aflac eliminated the duplication of premium payments in a contract renewal, but Japan Post did not make the necessary upgrade to its computer system to reflect that change, the sources said.

Shares of AFL are down over 4% today. The company responded:

Contrary to a certain media report, during the formal meeting of the Strategic Alliance Committee on July 17, 2019, Japan Post Holdings Co., Ltd. confirmed to Aflac Life Insurance Japan, Ltd. (Aflac Japan) that the Japan Post Group does not plan to halt the sales of Aflac Japan’s cancer insurance through the Japan Post Group system. Furthermore, consistent with comments on Aflac Incorporated’s July 26th earnings call, on July 26th Japan Post Holdings Co. Ltd. reconfirmed to Aflac Japan that there is no plan to halt the sales of Aflac Japan’s cancer insurance policies.

I’m not sure of the long-term impact of this but my first guess is that this will soon blow over.

Posted by on August 21st, 2019 at 11:56 am


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