Policy sales at Japan Post Insurance Co. have tumbled as the company has stopped sales promotion efforts after it came under fire for dubious sales practices.

The sharp decline in policy sales has underscored the urgent need for the life insurer to dig out all the facts about the scandal and revamp its management.

Sales of new policies in the July-September quarter, when Japan Post Insurance started a self-imposed ban on sales promotion activities, plunged 60 percent from the same period of the previous year, according to the company’s earnings report for the first half of fiscal 2019 released recently.

Since the costs of sales promotion operations, which are outsourced to Japan Post Co., also fell, the insurance arm of the Japan Post group is not facing a collapse of earnings, at least for the short term. But its future premium income will shrink.

Japan Post Insurance has been struggling for years to reverse the downtrend of premiums it collects. In a medium-term business plan it crafted in fiscal 2018, the company promised to bring its premium income back on a growth track after it bottomed out in the last fiscal year.

Under its turnaround strategy, the firm has been racing to shift the focus of its sales and marketing efforts from savings policies that have become less attractive due to extremely low interest rates to products with greater emphasis on risk coverage.

The revelations of sales irregularities came amid the company’s efforts to revitalize its earnings.

Unless the company, which has damaged the interests of many customers through questionable sales practices, regains the trust of consumers, its tarnished reputation will undermine its medium- and long-term business strategies.

Japan Post Bank, the Japan Post group’s banking unit, has also been found to have resorted to inappropriate sales practices for its investment trust business, which is seen as the new engine of its future growth. Japan Post Bank has also been struggling to secure profits on its investments because of extremely low yields.

If its insurance and banking units, which account for most of the group’s profits, continue faltering, the entire Japan Post group will face rough going. That will also muddy the prospects for the government’s plan to sell its shares in Japan Post Holdings Co. for privatization.

Japan Post Holdings’ in-house investigation committee and a special independent fact-finding panel comprising lawyers and other experts are scheduled to release by year-end separate reports on their respective inquiries into the inappropriate policy sales practices.

The future of the group will depend to a great extent on whether it can effectively use the findings to develop plans to improve its corporate governance.

But recent remarks by senior Japan Post executives have cast doubt on the seriousness of the company’s commitment to reforming itself.

Last summer, after Japan Broadcasting Corp. (NHK) posted a video on Twitter that called on people affected by Japan Post’s inappropriate sales practices to offer information, the group protested against the public broadcaster and rejected NHK’s requests for interviews.

Japan Post’s protest insisted that the content of the video and some words used in it were biased and unfair.

In July, Japan Post acknowledged the seriousness of the irregularities and apologized. In October, however, Yasuo Suzuki, the senior executive vice president of Japan Post Holdings, bitterly criticized NHK.

Suzuki asserted that NHK officials had said they would delete the video if Japan Post agreed to make someone available to be interviewed for the program. Suzuki likened that ploy as something "organized criminals" would use.

In response to Suzuki’s accusation, NHK posted the video afresh and said that it had not tried to get an interview with a Japan Post official the way Suzuki had described. But Suzuki repeated his charge.

Masatsugu Nagato, the president of Japan Post Holdings, said at his Sept. 30 news conference that the company would “do deep soul searching” when he was asked why the company’s management failed to conduct an in-house investigation into NHK’s allegations before protesting against the public broadcaster.

When he was summoned to answer questions at the Diet earlier this month, however, Nagato changed his stance and said he was “completely in agreement” with Suzuki over the matter.

Despite its grossly belated response to the allegations about the inappropriate ways Japan Post Insurance sold insurance policies, the Japan Post group seems to be unable or unwilling to correct its arrogant tendency to ignore criticism from the outside.

The gargantuan group cannot hope to regain public trust without changing its corporate culture.

--The Asahi Shimbun, Nov. 17