Inaugural address by New Chairman of Association (Translation)(July 26, 2002

Mr. Kunio Ishihara delivered his inaugural address as Chairman of the Marine and Fire Insurance Association of Japan, Inc. after his election on June 28, 2002. Mr. Kunio Ishihara, Chairman
Mr. Kunio Ishihara, Chairman

1. Environment surrounding the non-life insurance industry

After a prolonged period of severe economic stagnation, Japan is now entering a new era featuring conditions never experienced before. These are the transition to an aging society with a low birth rate and the development of a full scale IT society. Following these trends, various studies to realize a creative and vital society which can respond to such changes are being undertaken by the government and the private sector.
At the same time, we are becoming more seriously aware of risks in daily life and work as a result of such developments as the increase in crime and concern for food safety, in addition to uncertainty about the future brought about by the rapid changes in society and the economy. I think that people will have greater interest in and higher expectations of the role of non-life insurance, which encourages self-help in the private sector, as there have been increasing requests by the public to have public welfare systems reviewed.

I think that this is an era when non-life insurance will be requested to play a greater role in contributing to the creation of a vital society by providing the individual with the security necessary to enjoy life and daily activities.
Non-life insurance has so far sustained the infrastructure of society by providing security and safety in people's lives. For example, traffic accidents cause 1.3 million bodily injury accidents and 6.47 million physical damage accidents a year (according to the survey results in fiscal 2000 by the Marine and Fire Insurance Association of Japan, Inc.). Non-life insurance has helped to increase the public's sense of security and the stability of business operations by the payment of as much as three trillion yen in claims for the losses suffered by accident victims. Non-life insurance supports safety and security for the operation of the World Cup, which is now being held and is living up to expectations as the biggest world festival, thanks to the enthusiasm and cooperation of many people involved in the games. The need for non-life insurance has expanded to risk management which has generally been beyond the traditional segment of non-life insurance. Each non-life insurance company makes every effort to respond to these changes by the development and the provision of new products including derivatives, third sector insurance products, and various risk management services. It is becoming more important for the non-life insurance industry to be able to respond to the diversified and sophisticated needs of consumers and the complicated risks surrounding business enterprises, with flexible ideas and positive attitudes.

2. Chairman's principle and policy for activities

Recognizing these trends in the business environment, I would like to make the non-life insurance industry contribute to the realization of a truly affluent and vital society through the provision of products and services which respond appropriately to changes in the needs of society. I believe that the Association has an important role in promoting the review of the existing framework which has become an obstacle to the realization of such a society.
I think it is also the Association's role to collect and react positively to consumer voices as well as to provide people with more understandable information. This can be done by making use of IT, so as to ensure that non-life insurance will continue to enjoy public trust and be immediately accessible to consumers. It is my intention as Chairman to realize "open and consumer-friendly non-life insurance", and to listen to the voice of the consumer.
Under the difficult business environment surrounding the industry, individual non-life insurance companies endeavour to improve consumers' trust by implementing measures to maintain their business soundness. Such measures aim to strengthen their business base, improve efficiency and may include mergers and reorganizations. The Association will fulfill its duty to build a foundation which supports individual companies' efforts in their business as well as having them improve their disclosures.

3. Practical measures

I would like to promote the following practical measures.

(1) Measures to protect consumers

Following the advance of liberalization, individual companies use creative ideas to provide diversified products and services. The Association will provide consumers with more understandable information to help them choose products and services correctly. It will also further improve its activities to promote consumer's understanding of non-life insurance by carrying out such activities as holding symposiums on disaster protection and providing NPOs with information and schools with study materials.
With the aim of increasing consumer trust in the non-life insurance industry, the Association will endeavour to make its counseling offices consumer-friendly. It will also encourage individual companies to ensure thorough legal compliance in a wide range of their business activities, from the solicitation of insurance by their agents to the management of their business risks, and will actively support their measures to achieve this.
A review of the safety net for non-life insurance has become an urgent issue in the protection of policyholders, as a result of the failures of non-life insurance companies, such as Dai-Ichi Mutual Fire & Marine Insurance Co. the year before last, and Taisei Fire & Marine Insurance Co. last year. The reduction of the amount payable for accidents caused by the bankruptcy of a non-life insurance company has made a deep impact on the public, because claims payment is the essential function of non-life insurance. The non-life insurance industry will seek a more workable safety net to protect policyholders and save accident victims. We will also examine carefully whether the existing system is suitable for the specific nature of non-life insurance contracts, while referring to the systems used in other countries.

(2) Promotion of regulatory reforms

In order for individual companies to increase benefits to consumers through the development and the provision of new products and services which respond quickly to consumers' needs while maintaining their business soundness, we would like to request the government to promote regulatory reforms further by such means as simplifying the examination procedures for insurance products and promoting those procedures through electronic means.

(3) Response to globalization

Currently, the developments in international supervisory standards and international accounting standards on insurance are actively promoted by international organizations such as the IAIS (International Association of Insurance Supervisors) and the IASB (International Accounting Standards Board). This year is the year when financial services negotiations in the World Trade Organization will start full scale. These international moves will impact directly not only on business developments overseas of Japanese non-life insurance companies but also on our domestic systems in the near future. The Association will make known its opinion on those international issues.
In addition, the Association will continue close cooperative relationships with the U.S. and European trade organizations in order to help people overseas understand the Japanese insurance market as well as collecting useful information on overseas markets for our industry. The Association will also promote a friendly relationship with insurance related organizations in Asian countries through the 21st Conference of East Asian Insurance Congress which will be held in Tokyo after an interval of twenty years.

(4) Response to social problems

The Association has gained positive results in tackling the problem of automobile theft by promoting activities by the Joint Automobile Theft Prevention Project Team, comprising of the government and the private sector. However, if we weaken our preventive measures, it is possible that the automobile theft problem will grow again. The Association will continue to cope with this problem and take positive measures to prevent insurance crime, with the aim of cutting off the source of funds for organized crime and realizing a sound society. The Association will also deliberate measures to respond to terrorism risks after the practical needs of policyholders have been ascertained, while taking into account the responses to those risks in other countries and the trends in overseas reinsurance markets.

(5) Reform of the Association

The Association will realize the appropriate organizational structure and business operations in order for the Association to fulfill the role described above. By promoting the "New Mid Term Fundamental Reform Plan for fiscal 2001-2003, - towards further development of the non-life insurance industry -", the Association would like to make the best of its ability and capacity in the 21st century.

4. Conclusion

This is the general policy I would like to announce at the inauguration of my Chairmanship. I will do my best to achieve the goal to make non-life insurance open and consumer-friendly. I would very much like to ask you for your active support and kind cooperation.