Chairman's Statement (Translation)
released on March 18, 2004
(April 13, 2004

1. Current Economic Situation

According to analyses on the economic situation by publications such as the "Monthly Economic Report" of the Cabinet Office, the economy continues to recover steadily. In the short-term, the economic recovery in Japan is expected to continue as the world economy recovers, too. However, it is difficult to be optimistic about the future while there is the uncertainty of currency exchange risk and a volatile and unstable situation in the Middle East. Direct premiums written by our 22 member non-life insurance companies at the end of 3rd quarter of fiscal 2003 reached 6,715.1 billion yen, a decrease of 1.7%. Direct premiums by line, fire, automobile and personal accident insurance, which are the main insurance products, showed decreases of 2.9% (fire), 1.5% (automobile) and 3.3% (personal accident) respectively.
Mr. Ken Matsuzawa, Chairman

2. Financial System Council

(1) General insurance related issues

Discussion on some general insurance related issues is now underway in the Second Subcommittee of the Financial System Council and by the Subcommittee's Working Team. We would like to comment on some of these issues.

a. Regulation of insurance sales by banks (over the counter sales of insurance products by banks)
We oppose the introduction of full-scale deregulation of insurance sales by banks. This issue is now under discussion in the Financial System Council. We would like the Council members to discuss this problem carefully by putting emphasis on policy-holders protection.

b. Underwriting reserve system for natural catastrophe risks
We set up a working group last March and reviewed and discussed the current liability reserve system from the aspect of adequacy of the reserve which covers natural catastrophe risk. We drew up a report which took up several options where insurers would be able to set aside additional reserves for the ordinary underwriting reserves or for catastrophe loss reserves. At present, the working group is studying and discussing feasible measures and will be drawing up a report in the near future.

c. Review of policy-holders protection
We drew up a report on the review of the policyholders protection system last March and it was submitted to the Financial Services Agency. We hope that the current Policy-holders Protection Corporation scheme will be revised following discussions in the Council.

d. Unregulated cooperative insurers (Kyosai) Last November, we asked the Council for Regulatory Reform* to clarify that selling insurance products to the general public by unregulated cooperative insurers is a breach of the Insurance Business Law.
As the scale and form of unregulated cooperative insurers has recently diversified, we would like to insist that they be regulated by the Insurance Business Law because of consumer protection issues.


The Council for Regulatory Reform was established under cabinet order according to the provision of Article 37 (2) of the act on establishment of Cabinet Office on April 1, 2001.

(2) Personal Information Protection Law

Issues on personal information protection in the financial industry are now being discussed in the Special Subcommittee of the Financial System Council. The Association has discussed how to comply with the Personal Information Protection Law by establishing a task force under the Compliance Committee since last October. The task force is going to discuss the interpretation of the Law from the aspect of general insurance business and compile practical measures by this month (March 2004) and will incorporate them in the Association's compliance guidelines by June 2004.

3. Social and public Activities

(1) Social Issues

a. Automobile Theft Prevention
The number of automobile thefts in 2003 was 64,223 cases ( an increase of 1,550 cases, 2.5% over the previous year.). Unfortunately, it was the worst year on record. Geographically, automobile theft increased in Aichi, Gifu and Mie prefectures, which are located in the Chubu area of Japan. This resulted in a 34.8% increase in the area over the previous year (an increase of 3,302 cases). The increase of automobile theft in these 3 prefectures, accompanying the increase of the thefts of 3 neighboring prefectures of Tokyo, i.e. Chiba, Kanagawa and Saitama, was a major contributory factor to the year being the worst on record. In particular, the number of automobile thefts in Aichi prefecture was the worst, above the number in Osaka. (Source: The National Police Agency)
Under these circumstances, the "Automobile Theft Prevention Council" was set up in 43 prefectures in Japan as of March 10, 2004 when the Council was set up in Chiba prefecture. We also strongly promote various automobile theft prevention measures such as the Nationwide Anti-Theft Campaign on October 7 and Phase 3 of the Automobile Theft Prevention Campaign held last November. The number of automobile thefts from last October to February this year decreased consecutively for 5 months over the previous year. In particular, automobile thefts which were caused by leaving the ignition key in the automobile decreased noticeably. So, we think that our awareness promotion activities are gradually having a positive effect.

b. Crime Prevention
As there has been an increase in such crimes as lock-picking burglaries, snatch-and-run, etc., the General Insurance Association publicly solicited true incidents of these crimes. Ten out of 234 incidents are shown on our Web site. Also, we solicited information on crime prevention activities by communities under the auspices of the National Police Agency. These incidents and activities will be shown on our Web site to which the public has access.

c. Disaster Prevention Symposium
In Japan, we are concerned that there might be a big earthquake in the Tokai region or another area in the near future. However, the national average dissemination rate* of Earthquake Insurance on Dwelling Risks remains at a low levelof 16.4% (as of March 31, 2003). As one of the promotion activities of earthquake insurance, we held a symposium in Shizuoka prefecture on January 16, 2004 under the title of "Preparation for damages caused by a Tokai Earthquake" in order to prepare for the strong possibility of a disaster in the not too distant future. With 650 participants there from communities and local governments it was more than we expected. Residents were highly interested in the preparation plans for a Tokai Earthquake. We reaffirmed that dissemination of earthquake insurance is our highly priority mission. The Association continuously promotes earthquake insurance to raise both public awareness and the dissemination rate.

(2) Customer Services

a. School Education
In cooperation with the NPO Nippon Volunteer Network Active in Disaster based in Kobe City, the General Insurance Association of Japan made a video named "Let's Rediscover Our Town! Exploration for Disaster Prevention" as study material. The Association will encourage local governments and elementary schools throughout the country to carry out this hands-on experience program and will support them when they implement this program.

2. Utilization of CALI Investment Income
The General Insurance Association of Japan has been conducting various activities for the prevention of traffic accidents and the protection of traffic accident victims by utilizing investment income from accumulated Compulsory Automobile Liability Insurance (CALI) funds. The Association decided on the supporting activities for fiscal 2004 and reported these activities to the CALI Council held on February 27. We will allocate a total of about 2.6 billion yen (4.6 % increase over the previous year) on supporting activities which feature protection of traffic accident victims.

3. Other Activities
CALI is automobile liability insurance which is compulsory for all automobile owners (including small-sized motorbikes). Traffic accident victims have protection under the Automobile Liability Security Law. However, some small-sized motorbike owners, especially those of 250 c.c. or less, fail to renew their CALI contracts. Their uninsured rate is about 5%. In other words 1 out of 20 motorbikes is uninsured. To stop these uninsured small-sized motorbikes, the Association conducted the public awareness campaign named "Compulsory Automobile Liability Insurance Public Awareness Campaign" this March.

Every year, the Association has conducted a fire prevention slogan contest in cooperation with the Fire and Disaster Management Agency to promote fire prevention awareness since 1966.

The slogan of this fiscal year was selected on February 27. The winning slogan was used in the 2004 national campaigns and it was included on the fire prevention posters given by the Association to the Agency.

The total number of visitors to the Sonpo Information Square, which was opened September in 2002 on the 1st floor of the Non-Life Insurance Building to provide the public with general insurance information, reached 10,000 on March 17.We will expand our lines of service as a consumer-friendly service center.

We, the general insurance industry, will continuously conduct our missions proactively to make general insurance more reliable to our customers. We hope for your continued support of the industry.

About unregulated cooperative insurer's issue

Activities of unregulated cooperative insurers (Kyosai) are gradually being recognized as a social problem from the perspective of consumer protection. Although unregulated cooperative insurers operate the same business as insurance companies do, they are free from any supervision from authorities and there are no regulations concerning protection of policyholders' interests. In addition to consumer protection issues, unregulated cooperative insurers operations may distort conditions for fair competition between insurance companies strictly regulated by the Insurance Business Law and unregulated cooperative insurers. Most cooperative insurers are established to operate welfare benefit programs for employees of private companies or public officers of local governments. Beneficiaries of cooperative insurers must be limited to members of the cooperative insurers. Otherwise, it would be a breach of the Insurance Business Law. But for the last few years, unregulated cooperative insurers have provided their insurance products to the general public at lower premiums than regular insurance companies and consequently, have grown rapidly. pdf