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On representations of insurance products on newspaper advertisement

May 9/2003
Japan Fair Trade Commission

The Fair Trade Commission of Japan (JFTC)issued a cease and desist order today to Nippon Life Insurance Company ("Nippon Life"). The commission also released the results of an examination the commission conducted regarding representations of insurance products in newspaper and other advertisements, from the standpoint of the appropriate dissemination of information to consumers.

1. Cease and desist order against Nippon Life

Based on the Premiums and Representations Act, the JFTC issued a cease and desist order today to Nippon Life after determining that, during the period from approximately January 2001 to approximately November 2002, Nippon Life made representations as though it will pay hospitalization benefits retroactive to the first day of an insured's hospitalization period when the insured was instructed to enter a hospital by a physician who suspected cancer and a diagnosis of cancer was confirmed during hospitalization, despite the fact Nippon Life will pay from the day the cancer diagnosis was confirmed, which the commission deemed to violate the provisions of Section 4 Subsection 1 (Misunderstanding as Superior) of the Act.

2 Examination of the actual conditions of representations of insurance products in newspaper and other advertisements

(1) Because advertisements in newspapers and other media are being aggressively used by insurance companies and other entities that utilize Internet-based sales or mail order sales approaches for insurance product solicitations, the JFTC recently conducted an examination concerning representations of insurance products in newspaper and other advertising, not as incidents of suspected violation of the Premiums and Representations Act, but from the standpoint of appropriate dissemination of information to consumers,.
While one aspect of such insurance product advertisement and public relations activity is linked to the promotion of competition in the insurance products sector, on the other hand, cases have been noted in which advertisers make representations emphasizing the superior contents or advantageous terms and conditions of the insurance products offered in newspaper advertisements, while matters that are important for consumers such as terms and conditions limiting the content of coverage are not represented or are represented in extremely small print.

(2) To point out to each insurance company using advertisements such as those indicated above the need to make representations more appropriate in order to contribute to appropriate consumer product selections, and from the standpoint of the importance of making representations by the entire industry more appropriate, the commission today requested The Life Insurance Association of Japan to provide guidance on appropriate representation efforts for the organization's members and to take steps to make representations more appropriate, including the creation of a fair competition code concerning representations.

*Every announcement is tentative translation. Please refer to the original text written in Japanese.

Japan Fair Trade Commission:

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