Nippon Life Insurance Co has announced it will wind down its practice of assigning staff to sales divisions at banks and other external financial institutions.
The move comes amid concerns that such placements may compromise competition and market fairness.
Historically, secondment arrangements allowed insurers to station personnel within partner organisations, including regional and major banks, to promote insurance products. Nippon Life currently has 51 employees working under such agreements.
According to Bloomberg, discussions are underway with host firms to either transition these employees into non-sales roles or conclude the secondments altogether.
The operational review follows broader scrutiny of sales practices in the insurance sector.
One notable case involved Bigmotor Co, which in 2023 admitted to intentionally damaging vehicles to manipulate insurance claims. As a result, Sompo Holdings Inc received regulatory action from Japan’s Financial Services Agency (FSA) for its connection to the fraudulent activities.
Regulators and industry bodies have since taken steps to reduce risks linked to such staffing models. In September 2024, the General Insurance Association of Japan (GIAJ) introduced new guidelines banning the dispatch of insurance company employees into sales departments of partner firms. The FSA has also signalled a heightened focus on monitoring secondment practices across the industry.
Nippon Life is also making significant changes to its investment approach, notably reducing its exposure to Japanese government bonds. This marks the first such reduction in holdings by book value since fiscal year 2016.
The insurer pointed to liquidity concerns and increased volatility in longer-term bonds as key reasons for the shift.
Akira Tsuzuki, an executive officer responsible for investment planning, said the company is watching market trends closely. He noted that the environment in the long end of the bond curve remains uncertain, and the company is adjusting its strategy accordingly.
With Japanese life insurers collectively managing nearly ¥390, shifts in investment behaviour can influence both domestic and international markets.
While Nippon Life and Meiji Yasuda Life Insurance Co are moving away from yen-denominated sovereign bonds, others such as Fukoku Mutual Life and Daido Life are expanding their positions in the same instruments.
