The Japanese financial regulator, the Financial Services Agency (FSA), has handed down a series of restrictions on trading activities to Mitsui Sumitomo after the insurer was found guilty of failing to pay out on legitimate claims.
Reuters reports that Mitsui is to be banned from selling cover of any kind for a fortnight from July 10, 2006, while it will be prevented from selling medical insurance for an unspecified period. The regulator will need to be assured that the company has sorted out its internal governance systems before trading resumes fully.
According to the Financial Times, the FSA said that its inspection of Mitsui Sumitomo revealed serious flaws in its system of checks and supervision of insurance payments. Mitsui apparently failed to pay out legitimate claims in some 40,000 cases, the FSA found.
The embargo on its business will not affect the renewal of existing contracts, however. Mitsui is Japan’s number two casualty insurer by market value.