Aflac Inc. is expecting a decline of as much as 50% in Japan Post group channel sales for the rest of 2019, versus a "very strong" 2018, but its cancer policies continue to be sold through the postal channel.
The insurer also projects that the anticipated decline will cause total third sector and first sector protection sales to be down in the mid-teens for 2019.
Aflac's statement comes after recent media reports that 104,000 of its issued insurance policies were improperly sold by Japan Post Co. Ltd. The management of the insurer's subsidiary, Aflac Life Insurance Japan Ltd., or Aflac Japan, saw a material decline in sales at about 25% of normal daily volumes, based on daily proposal and new annualized trends to date in August.
The 104,000 policies represent lapsed and issued policies in Japan Post's channel between May 2018 and May 2019, Aflac said. During the same period, Japan Post Insurance Co. Ltd. also sold 2,600 lapsed and reissued policies.
Aflac reiterated that Aflac Japan has started a "rigorous, voluntary review of postal channel sales" focused on policyholders who wish to turn in their old cancer policies in favor of new policies. Aflac also noted that Japan Post and Japan Post Insurance elected in early 2019 to adopt and install starting late 2019, once administratively ready, a conditional surrender program that aims to guarantee a smooth transition from old to new policies. The program was initially introduced in 2014, but implementation stalled due to policy cancellation process concerns.
Aflac said it has not been informed of and is not anticipating any disruption in its long-term alliance plans and associated capital commitment by Japan Post Holdings Co. Ltd. in its stock.
In July, Japan Post Insurance President Mitsuhiko Uehira apologized for the company's mismanagement of certain insurance policies, Japan Today reported. Japan Post Holdings then said it will set up a third-party panel to help revise excessive sales quotas for personnel together with units Japan Post Insurance and Japan Post, The Japan News reported.
Later in July, Aflac rebuffed media reports that Japan Post is close to implementing a temporary suspension of sales of private insurance at post offices following the discovered mismanagement of insurance policies.
