Tokyo, July 15: Sumitomo Marine & Fire Insurance Co Ltd says it has no plans to enter the securities and banking sectors, to be opened up under Japan's "Big Bang" reforms, and will stick with what it does best -- insurance.

"We do not intend to join banking and securities business...We don't see any advantage to joining those businesses," president Takashi Onoda said in a recent interview with Reuters.

He also said Sumitomo Marine and Fire, Japan's fourth-biggest non-life insurance company, is not interested in setting up a financial holding company either.

Under `Big Bang' reforms that will break down barriers between the banking, securities and insurance sectors, Japan will allow financial institutions to form financial holding companies.

Analysts say big Japanese banks are interested in setting up financial holding firms as the corporate structure of these firms gives them more flexibility in setting different pay scales and cutting unprofitable operations.

Onoda said, however, that it is possible the company will set up such a firm to expand into other insurance-related business fields in the future.He said that forthcoming liberalisation in the insurance market would not only offer more business opportunities to foreign firms in Japan but also allow trading houses and car and machinery makers to enter the sector.

To survive fierce competition, Japan's non-life insurers should focus on their specialties and in the regions where they are strong, he said.

He also said that even if fierce competition were to lead to failures of non-life insurers in the future, the industry's policyholders' protection fund would be enough to cope with the failures.

"Even if liberalisation results in the collapse of some firms, a total of 30 billion yen in the funds is sufficient (to protect policyholders)."

Onoda added: "I don't think there will be any failures of non-life insurers because of the bursting of the `bubble' economy (of inflated asset prices during the late 1980s)."

Japan's non-life insurance industry faces growing competition after an agreement between Japan and the United States to open up Japan's insurance market, and amid `Big Bang' reforms to liberalise the nation's financial markets and break down barriers between financial industries by 2001.

Last December, Japan and the United States concluded an agreement in which the current system of setting premiums for the non-life insurance sector, including auto and fire insurance products, will be liberalised by July 1, 1998.

Under the agreement, Japan will also allow non-life insurers to freely set car insurance premiums on the basis of various risk factors, including age, gender, accident records and region, from September 1 this year. Onoda said the liberalisation of car insurance premiums should not lead to more uninsured young drivers on the road.

"It would be a problem if the liberalisation makes it hard for young drivers to buy auto insurance... It will also be a problem if more uninsured drivers drive cars (in Japan)," he said.To prevent such problems, the ministry of finance (MoF) is expected to announce new guidelines on setting premiums before the liberalisation next July, he said.

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