Chairman's Statement (Translation)
released on September 19th, 2002（Sep. 19, 2002）
1. Events in the non-life insurance industry
One year has passed since the September 11th terrorist attacks took place. The reorganization plan of Taisei Fire and Marine Insurance Company Ltd. which went bankrupt triggered by the events of September 11th was approved by the Tokyo District Court on August 31st. Seven typhoons have struck so far this year and have caused losses nationwide. The largest losses were caused by Typhoon No. 6, which hit Japan between July 9th and 14th. The total estimated losses insurance companies will pay amounted to 4.1 billion yen. I would like to express my deepest sympathy to all people who suffered losses, and I sincerely wish that non-life insurance coverage will help them recover.
2. Practical measures
We have taken the following measures to date.
2.1. Measures for consumer protection
2.1.1. Review of the financial safety net
The Association established the working party on the financial protection system in May, in conjunction with the Foreign Non-Life Insurance Association of Japan, and has deliberated the new framework with reference to those systems adopted in other major countries. The Association has completed an interim report, and the following basic conclusion has been reached: It is more important for the protection of policyholders to secure payment of claims than ensure the continuity of insurance contracts, since the essential function of non-life insurance is to compensate actual losses. Further, in the cases where policyholders are individuals, it is desirable to secure claims payment of 100% for a certain period without limiting the type of insurance. The Association will continue to discuss the details and produce a final report at the end of this year. The Association will endeavour to persuade the relevant parties to realize the necessary amendment of the laws.
2.1.2. Supply of information to consumers
In order to furnish information on non-life insurance in more easily accessible ways, the Association opened the "Sonpo (Non-Life Insurance) Information Square" on the ground floor of the Non-Life Insurance Building in Kanda, Tokyo on September 10th. It provides the very latest information including that on major non-life insurance products and disclosure materials of each non-life insurance company as well as consultation services. In addition, the Association has revised the "Guide Book for the Understanding of Disclosure Materials of Non-Life Insurance Companies", a booklet which provides a basic explanation of the contents of disclosure materials of each company, in order to make it more easily understandable from the consumers' point of view.
2.1.3. Compliance related issues
With the aim of eradicating misconduct such as money-laundering and deliberate hiding of taxable properties, the Law concerning the Identification of Customers by Financial Institutions is to be enforced in January 2003. The Association has studied practical procedures to identify customers who conduct large financial transactions, and has urged each member to implement those procedures thoroughly.
Following the expansion of the range of insurance products sold over the counter by banks which is to start on October 1st, the Association has made it possible for banks to participate in the Non-Life Insurance Arbitration Committee, an organization established in the Association which is engaged in support activities to solve complaints and/or disputes regarding non-life insurance. The Association has also reviewed its "rules for procedures to deal with complaints and other consultations about non-life insurance".
2.2. Promotion of reform
2.2.1. Requests for regulatory reform
The Association drew up its requests for regulatory reform. These include simplifying prior approval procedures for insurance products, shortening the waiting period for approval and defining more clearly the types of misconduct to be prohibited in the course of concluding and/or soliciting insurance contracts. In July, the Association submitted these requests to the Nippon Keidanren, the Japan Business Federation and in August, submitted them to the Council for Regulatory Reform of the government.
2.2.2. Requests for tax reform
The Association has drawn up its tax reform requests for fiscal 2003 including the following items:
1) Elimination of double taxation on received dividends, 2) Establishment of a premium tax deduction system responding to the changes in society, and 3) Creation of tax exemption for the liability reserves which responds to investment income regarding Compulsory Automobile Liability Insurance.
The Association will lobby relevant parties to secure these requests.
2.3. Response to globalization
2.3.1. Development of international standards
The Association actively responded to the request for the industry's comments on the draft documents on international standards regarding insurance regulation and supervision from the International Association of Insurance Supervisors (IAIS), and to an inquiry about the industry's opinions on the review of the "FATF Forty Recommendations" regarding international standards on anti-money-laundering measures from the Financial Action Task Force on Money Laundering (FATF).
2.3.2. Promotion of international dialogue and information exchange
In July, the Association hosted the Insurance School (Non-Life) of Japan (ISJ) Overseas in Beijing and Shanghai, China, with about 200 participants from government, academia and the insurance industry. The Association also held the ISJ in Tokyo in September, under the theme of marine and transit insurance, aviation insurance and energy related insurance, with the aim of promoting mutual understanding and exchanging views and information amongst the 27 participants from the East Asian regions.
2.4. Response to social problems
2.4.1. Combat against automobile theft
As a result of measures taken in cooperation with relevant parties, the number of automobile thefts for the first quarter this year amounted to 15,403, down 5.4% from the same period of the previous year (according to the National Police Agency), and the amount of claims paid under the physical damage coverage of automobile insurance for losses arising from automobile theft marked 14.4 billion yen, down 6.5% from the same period of the previous year. In order to reinforce this downward trend, the Association has examined the effects of immobilizers (electronic movable lock devices) by type of automobile and announced the result of its analysis in August. The Association has also started operating the data exchange system with the Nippon Auto Auction Association to prevent crime in the used car distribution market. In addition, the Association has promoted the establishment of local automobile theft prevention councils (in thirteen areas so far), in cooperation with police departments and other relevant parties.
2.4.2. Response to terrorism risks
The Association continues to promote discussions through its working party on the study of the creation of a terrorism risk pool. Although the creation of such a pool primarily depends on the strength of demand for coverage from corporate customers, the non-life insurance industry will make adequate preparations in case such a pool system should suddenly be requested.
2.4.3. Response to natural catastrophes
In response to the expansion of the Earthquake Intensive Loss Prevention Area designated by the government in preparation for a Tokai earthquake, the Association is reviewing the "Loss Evaluation and Claims Handling Plan for a Tokai Earthquake" (a manual for claims settlement practices). The Association has also promoted public awareness of the necessity of disaster prevention through a series of seminars and symposiums.
I will continue to make every effort to carry out the measures to make non-life insurance open and consumer-friendly, listening to all consumer voices. I would like to ask for your continued support and cooperation.