Chairman's Statement (Translation)
released on June 19, 2003（June 19, 2003）
Under these circumstances, general insurance companies have tried to increase their operational efficiency by reviewing the structure of their organization and business processes. They have also actively rationalized their sales channels and product development. Furthermore, each company has tried to improve customer services with the following.
- Offering war risks cover on Iraq War
- Revision of the Overseas Travelers Personal Accident Insurance to enable claims payment for SARS
(Severe Acute Respiratory Syndrome)
In respect of major claims paid after July 2002, general insurance companies of our Association have paid claims in the wake of the natural disasters given below. We believe that services provided by our members have been put to good use in the recovery from the disasters.
[Total claim paid]
Typhoon No.6 (July 2002)--- about 6.0 billion yen
Typhoon No.21 (October 2002)--- about 26.2 billion yen
Miyagi Prefecture offshore earthquake (May 2003)--- about 1.5 billion yen*
* Total claims paid for earthquake insurance only. (As of June 19, 2003)
The importance of being fully prepared for natural disasters has been widely recognized. The government has now redefined the area where heavy damage is expected in a Tokai earthquake or in a Tonankai-Nankai earthquake.
This will allow insurance companies to fine tune their services to help consumers in recovering from a natural disaster in those areas.
Since I became Chairman of the Association, I have emphasized the following 6 activities to realize "open and consumer-friendly general insurance".
1. Consumer Protection Measures
- The Establishment of the "Sonpo (General Insurance) Information Square." *1
- Holding a loss prevention symposium on floods, and earthquakes in Tokyo, Shizuoka, Nagano, Kochi and Nagasaki to make people aware of general insurance.
- Exchanging views with administrative bodies for consumers and consumer groups.
- Survey of the customers' needs through Non-life Insurance Consulting Offices and passing these on to each general insurance company's management.
- Publication of an easy to read illustrated magazine entitled "Safety and Security in Life" to help high school students' understanding of risks that exist in daily life, and the free distribution of the book to junior and senior high schools all over Japan.
- To enhance consumer confidence, information on reinsurance and the number of consultations and inquiries have been added to the Association's Disclosure Standard.
- Compliance with the law and regulations on personal identification. to prevent negative effects with the increase of over-the-counter sales of insurance products by banks.
on proper advertising of insurance products.
- Expansion of the support of activities bringing relief to traffic accident victims under the Compulsory Automobile Liability Insurance system with the abolition of the reinsurance system operated by government.
- A revision of the policyholders safety net conducted by a taskforce concerning the policyholders protection system. *2
About 90,000 people contacted nationwide counseling offices provided by the Association in fiscal 2002. In order to furnish information on general insurance in more easily accessible ways, the Association opened the "Sonpo (General Insurance) Information Square" on the ground floor of the Non-Life Insurance Building on September 10, 2002.
The Association established a taskforce in conjunction with the Foreign Non-Life Insurance Association of Japan in May 2002 to deliberate what system should be employed to protect policyholders more appropriately when a general insurance company goes bankrupt. The taskforce studied the new system with reference to similar systems in other countries and drew up a final report from the viewpoint of policyholders protection and stable operation of the system. The report was submitted to the Financial Services Agency and will be deliberated in the Financial System Council. The Association will make every effort to realize the new system as soon as possible
2. Promotion of regulatory reform
The Association submitted a request to the Council for Regulatory Reform of the Cabinet Office calling for regulatory reform. This includes simplification and computerization of the examination procedures for insurance products, of which 10 items, such as review of the general insurance policyholders protection system and the partial lifting of limitation of the business for a subsidiary of a general insurance company, were taken up as the issues to be discussed in the "Second Report Regarding Promotion of Regulatory Reform" issued by the Council for Regulatory Reform. Some of the requests for regulatory reform, "Revision of the registration system for insurance agents and brokers" and "Formulation of guidelines on prohibition against provision of extraordinary profit" have been partially realized. As for tax reform requests for fiscal 2003, "To make insurance premium deductible from taxable income responding to changes in society" and "Elimination of double taxation on received dividends" were taken up as the "agendas to be studied and reviewed" on a large package of tax revisions for fiscal 2003 issued by the administration party. We hope these requests will be realized in the future.
3. Response to Globalization
Besides submitting opinions and requests to the IAIS (International Association of Insurance Supervisors) and FATF (Financial Action Task Force) which are working on international standards, the Association has been discussing the impact of international accounting standards which the International Accounting Standard Board has been discussing prior to their possible introduction into the insurance industry. As regards the promotion of international communication and cooperation, the Association held the ISJ Overseas Seminars in Beijing and Shanghai in July 2002, and hosted The 21st Conference of the East Asian Insurance Congress (EAIC) in Tokyo in October. The Association has been promoting cooperation with insurance associations overseas and officially concluded a memorandum of cooperation with the Insurance Association of China on May 20 and with the American Insurance Association on June 10, 2003.
4. Actions taken against social problems
The Association has actively participated in the prevention of automobile thefts and insurance related crimes in order to realize a sound and healthy society by cutting off the sources of finance of criminal organizations. To take pertinent preventive measures in local communities, the Association has been lobbying local police departments to establish Automobile Theft Prevention Councils. We successfully increased the number of Councils from 5 at the end of June 2002, to 33 to date. Besides this, we have newly added construction machinery theft issues to the activities of the Government-Private Sector Joint Automobile Theft Prevention Project Team, and have started the exchange of stolen automobiles information with Nippon Auto Auction Association to prevent sales of stolen automobiles in the used car market. As a result of phase 2 of the Automobile Theft Prevention Campaign where the Association publicized the effectiveness of immobilizers, the number of automobile thefts decreased up to the 3rd quarter of 2002. But the number of thefts significantly increased in Aichi, Chiba, Saitama prefectures in the 4th quarter. The total thefts in fiscal 2002 ended March 31, 2003 was 63,876, an increase of 1.9% compared with the previous fiscal year. (Source: National Police Agency) The target of automobile thefts has changed from luxury cars to standard cars and from new cars to used cars. For these reasons, the amount of payment per claim is smaller than before. Consequently, the total amount of claims paid decreased by 1.9% to 58.2 billion yen. We, however, should continue to take decisive action to crack down on this issue. The Insurance Crime Prevention Committee, having been set up in the Association, took the initiative of supporting local police departments by using claims data stored by the insurance companies. The Anti-Crime Campaign has just been launched on the Association's web site to provide information on arson and burglary by way of answering quizzes.
5. Preparation for catastrophe risks
The Association has been collecting information on terrorism risk protection schemes introduced in overseas' markets and has discussed a possible protection scheme with interested parties. As a response to natural disasters, the Association has revised its Tokai Earthquake Insurance Claims Settlement Plan to prepare for smooth claims settlements and has launched the Earthquake Insurance Campaign to appeal to consumers using TV commercials and newspaper advertisements. The Association has made the Hazard Maps for Flood (CD-ROM) and has provided it to 3,300 municipalities free of charge.
6. Restructuring of the Association
The Association has been trying to rationalize its operations by reorganizing its branch offices and Automobile Insurance Claims Counseling Centers in line with the New Mid-term Business Plan for fiscal 2001-2003.
Before closing, I would like to say that as people feel risks more closely in life and business these days, and the needs of insurance as a self-help measure grows, the following are important missions of the Association; - to provide information to consumers and to listen carefully to their concerns, and - to raise the reliability of the insurance industry in society. Although demands of consumers change with time, the Association is fully committed to these missions by being proactive rather than being retroactive. We hope for your continued support of our industry.