Chairman's Statement (Translation)
released on June 17, 2004
(July 5, 2004

I would like to look back on the events of the past 12 months.
Mr. Ken Matsuzawa, Chairman

1. The Role of General Insurance and the Circumstances surrounding the General Insurance Industry

The Japanese economy has made steady gains since I assumed the chairmanship of the GIAJ a year ago and is now on the road to recovery. However, with the increase in crime and corporate scandals and concerns of a future large-scale earthquake, social unease has still remained. In such circumstances, the role of general insurance has increased and we realize importance of our mission more strongly than ever before.

2. Specific Activities in the Last 12 Months

We have conducted the following activities to be more "reliable" and "closely related " to our customers since last July.

(1) More Reliable Insurance Industry

To develop the general insurance business environment, we discussed the insurance system with various concerns and implemented some activities for enhanced soundness and transparency of management to make the general insurance industry more reliable to customers.

a. Financial System Council Discussion on some general insurance related issues has been underway since last January in the Second Subcommittee of the Financial System Council and in the Subcommittee's Working Team.

* Regulation of Insurance Sales by Banks
The Second Subcommittee of the Financial System Council approved the reports submitted by the Working Group of the Fundamental Issues of Finance on March 31, 2004. The report proposes that insurance products dealt by banks be expanded in steps and restrictions be totally lifted in three years after assessing the effectiveness of measures which prevent forced sales and other types of harm to customers.

In order to avoid adverse effects on customers' benefits and conveniences, the GIAJ continues to pay the utmost attention to the system of preventive measures and its effectiveness. We would like to express our position whenever the need arises.

* Review of Policy-holders Protection Scheme
The GIAJ drew up a report on the review of the policyholders protection scheme March 2003 and it was submitted to the Financial Services Agency. We have drawn special attention to the general insurance function as a coverage to losses and have suggested that the current scheme, which was drawn up based on the concept of "ensuring the continuity of contracts", should be revised from the point of "security of claim payment". The Subcommittee's Working Team has discussed this matter. We hope that the current scheme will be revised following discussions in the Council.

* Unregulated Cooperative Insurers (Kyosai)
Discussion on cooperative insurers who are unregulated by any oversight agency or law, has been underway in the Second Subcommittee of the Financial System Council and by the Subcommittee's Working Team. We think that unregulated cooperative insurers who provide their services to unspecific public* should be regulated from the point of customer protection. We hope that the proposal will promptly realize.

Notes

Cooperatives called Kyosai basically cover people with a common interest, such as doctors, teachers, train drivers, etc. providing benefits like funeral expenses with relatively low premiums. Some Kyosai are regulated but others are unregulated and cover people without common interests, like a normal insurance company.

b. Soundness and Transparency of the Management The General Insurance Association of Japan set up working group in March 2003 and studied a new fire insurance underwriting reserves system for natural hazards. The group drew up the report and submitted it to the FSA on March 31, 2004. Draft of the revised regulations are now consulted to the public. We are going to continue studying this matter. To do so, underwriting reserves system for natural hazards will be further secured. We draw up disclosure standard to enhance transparency in each member company's management. We strengthened disclosure on underwriting reserves system for third sector insurance (It is compulsory to disclose from fiscal 2004.) and matters relating to reinsura
nce business.

c. 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 of the GIAJ since last October. The task force has discussed the interpretation of the Law from the aspect of general insurance business. It made a tentative report on interpretation of the Law and is now verifying its perception of interpretation with the authorities. It has also discussed the draft revision of the Association's self-imposed compliance guidelines.

d. Natural Disasters
Last year, large-scale earthquakes with a seismic intensity of 6 occurred in Tohoku in May and in July and in Hokkaido in September. Claims payment for these earthquakes reached 9.5 billion yen. Claims payment for heavy rain in Shizuoka and Kyushu in July and typhoons No.10 and No.14 in August and September reached about 28.9 billion yen. Claims payment is one of the most important roles for general insurance companies and is central to their function. Our member companies continuously make efforts for prompt and proper claim payments.

e. International Issues
The GIAJ participated in the International Association of Insurance Supervisors (IAIS) annual meeting and Sub-committees as an observer. As the IAIS Core Principles, Methodology and other Standards are reflected in Japanese insurance supervision, we actively observed the IAIS activities and submitted our comments to them to reflect our views on the IAIS's various Standards.

We were also actively involved in the issues of the IASB (International Accounting Standards Board), the WTO (World Trade Organization) and FTA (Free Trade Agreement) and presented opinions, submitted requests to related authorities and exchanged information with insurance related bodies in Europe and the US. Last November, the GIAJ and the Korea Non-Life Insurance Association signed a Cooperation Memorandum in Tokyo. In response to the advancement of internationalization, the Association has already concluded this type of cooperative agreement with 5 Associations. Therefore, the Korea Non-Life Insurance Association was the 6th association for us to sign a Cooperation Memorandum. We continuously have contact with insurance Associations overseas to exchange respective market information and to strengthen friendship in the future.
f. Underwriting Scheme for Terrorism Risk Insurance
We have studied terrorism risk insurance pools in other countries and exchanged views and information with related bodies on ideas of the introduction of a corporate terrorism risk insurance scheme. We will continue to pay attention to corporate needs for terrorism risk insurance.

(2) Making General Insurance a Part of the Customer's Life

The GIAJ has carried out crime prevention and disaster prevention activities to achieve its social responsibility and to make general insurance something that the people can closely relate to.

a. Crime Prevention The number of automobile thefts last year reached about 64,000. Unfortunately, it was the worst year on record. (Source: The National Police Agency) The claims paid by our 21 member companies amounted to 58.3 billion yen, an increase of 0.1 billion yen over the previous year.
The GIAJ has promoted various automobile theft prevention measures such as the Nationwide Anti-Theft Campaign on October 7*. "Automobile Theft Prevention Council" which is operated jointly by governments and private sectors was set up in 44 prefectures in Japan.
Compared with last year by month, the number of automobile thefts from last October to this April decreased for 7 consecutive months. It shows our efforts are gaining reward.

Notes

This is a kind of pun. The pronunciation of "October 7" in Japanese is similar to the Japanese word for theft. The Association named October 7 as Theft Prevention Day and conducted a nationwide campaign.

As there has been an increase in such crimes as lock-picking burglaries, snatch-and-run, etc., the GIAJ publicly solicited true incidents of these crimes last October. Ten out of 234 incidents are shown on our Web site to increase public awareness. Also, we solicited information on crime prevention activities by communities under the auspices of the National Police Agency last December. The GIAJ gave an award to some of the activities which were selected among more than 100 activities in May this year. These incidents and activities are shown on our Web site to which the public has access.

b. Disaster Prevention
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 level. The GIAJ has promoted earthquake insurance for some time past. From last August to September, the GIAJ implemented an Earthquake Insurance Promotion Campaign. As part of the campaign, the GIAJ supported a forum which was held by the Radio Committee of the National Association of Commercial Broadcasters in Japan to educate the public about the importance of disaster prevention. The presenters of 101 radio stations participated in the forum and then passed on the information to their listeners via normal radio broadcasts.
In addition to the radio forum, we did various disaster prevention activities such as holding a symposium to raise public awareness.

c. School Education
The GIAJ carried out a disaster prevention education program for elementary school children named "Exploration for Disaster Prevention" in last October and December at elementary schools in Tokyo. The program is designed to guide children to gradually discover the importance of disaster prevention through enjoyable explorations of their town. The GIAJ took a video of this program as study material and distributed it to local governments and elementary schools for promotion of this hands-on experience program. Additionally, we will solicit disaster prevention maps from elementary schools throughout the country and will carry out "disaster prevention map" contests. Aiming at raising student's awareness of security and disaster protection and promotion of understanding of general insurance, the GIAJ is now holding the 42nd essay contest for senior high school students titled "Safety and Security in Life" every year. The contest started in 1963 and the accumulated number of essays reached about 310,000. The contest has grown to be one of the biggest essay contests in Japan. Other than these activities, the GIAJ did several disaster prevention and crime prevention activities such as making and providing study materials and sending lecturers to junior high schools and/or senior high schools to support school education.

d. Customer Services
The GIAJ relaunched its Japanese web site this June. We believe that it is easier to find necessary information and to understand information than ever before. The total number of visitors to the Sonpo Information Square, which was opened in September in 2002 on the entrance hall of the Non-Life Insurance Building to provide the public with general insurance information, was up over 11,000. We will expand our lines of service as a consumer-friendly service center. Other than these services, we implemented several Internet surveys to find customer needs.

Before closing, I would like to express my appreciation for the support and cooperation of the customers. The GIAJ had finished the 2nd Mid-Term Business Plan for fiscal 2001-2003 with great achievements. From this fiscal year we started the 3rd Mid-Term Business Plan for 2004-2006. We will improve our expertise in the area of customer services and social responsibility, and will continuously conduct our missions proactively so that we can maintain our good reputation with our customers. We hope for your continued support of the industry.