Chairman's Statement (Translation)
released on March 17, 2005
(April 11, 2005

I would like to report our activities and events which were implemented or occurred after December 2004, when I last made a Chairman's Statement. Mr. Hiroshi Hirano, Chairman
Mr. Hiroshi Hirano, Chairman

1. Events related to the General Insurance Industry

On December 24, 2004, the "Program for Further Financial Reform", which will be the policy of financial administration from 2005 to 2006, was released by the Financial Services Agency (FSA). This program was devised to establish a financial system in which the level of users' satisfaction is higher, which is evaluated well internationally, and which is not led by the "public sector", but by the effort of the "private sector". In this program, the FSA recognizes that Japan's financial system is entering a new forward-looking phase, a move from "stability" to "vitality", aimed at establishing a desirable financial system for the future, having now moved beyond the emergency stage of responding to the non-performing loans problem. The "Program for Further Financial Reform" refers to some particular challenges for the insurance business in terms of "Emphasis on users' needs and thorough implementation of user protection rules" and "Strategic use of IT for strengthening the competitiveness of financial institutions and further developing financial infrastructure". The "Work Schedule for the Implementation of the Program for Further Financial Reform" will be published by the end of this month. As these challenges fit our own future objectives, the GIAJ will work harder than ever to achieve these particular challenges such as the "Establishment of a framework that promotes the offering of diverse and high quality financial products and services", "Thorough implementation of user protection rules" and "Enhanced governance".

The total amount of direct premiums from April to December 2004 written by our 21 member direct general insurers was 6,652.7 billion yen, a decrease of 0.9% over the previous year. However, with the exception of the decrease in maturity-refund-type insurance premiums, the decrease was just 0.2%. As our member companies strengthen sales promotion in the field of miscellaneous casualty insurance products and insurance products in the "third sector" such as medical insurance and nursing care insurance, the total amount of direct premiums in the fiscal year 2004 will remain at the same level as the previous fiscal year.

2. Specific activities

(1) Enhancement of customer services

The GIAJ opened "Sonpo Information Square" on the ground floor of the Non-Life Insurance Building in Kanda, Tokyo in September 2002 in order to provide information on general insurance in more accessible ways. It has had 15,000 visitors since its establishment. On March 3 this year, as one of the promotion activities designed to bring general insurance closer to customers, we renovated the Information Square, making it 1.6 times larger. The GIAJ will do all it can to make this office an even more customer-friendly facility in the future.

(2) Implementation of social responsibility

a. Revision of the GIAJ's Codes of Conduct

In addition to providing insurance products, the general insurance business has committed itself to fulfilling its social responsibility by getting involved in activities that contribute to social and public welfare including the "development of awareness of disaster prevention," the "prevention and reduction of traffic accidents" and the "promotion of anticrime measures", which are closely related to the nature of our business, and also by actively participating in "dealing with environmental issues".
Meanwhile, changes in the social environment in recent years clearly indicate that requirements on compliance with laws and the practice of corporate ethics have increased and that business activities with due consideration paid to social and environmental as well as economic aspects have been gaining in importance, as measures of what makes a trusted corporation. The GIAJ has therefore revised its Codes of Conduct with a view to meeting the expectations of society and boosting customer confidence.
The revised Codes of Conduct newly establish the following 3 basic principles: "human dignity", "compliance" and "active social participation". Based on these principles, we drew up the following 12 Action Guidelines. The member companies of the GIAJ shall pay due attention to these Codes of Conduct and put them into practice.

Twelve Action Guidelines
- Guidelines concerning products and services
- Guidelines concerning customer relationship activities
- Guidelines concerning handling of personal information, etc.
- Guidelines concerning communications with the stakeholders
- Guidelines concerning employment and work environment
- Guidelines concerning the global environment
- Guidelines concerning creation of a safe society
- Guidelines concerning social contributions
- Guidelines concerning asset management
- Guidelines concerning reinforcement of the internal control system
- Guidelines concerning international business activities
- Guidelines concerning emergency response

b. United Nations World Conference on Disaster Reduction

The great earthquake of December 26, 2004 off Sumatra generated a tsunami in the Indian Ocean. It was an unprecedented disaster and tragically, the number of people presumed dead reached more than 300,000.
This fiscal year, there were several natural disasters in Japan. I am reminded once again of the mission and social responsibility of the general insurance industry in promoting disaster prevention activities and providing insurance coverage against unexpected disasters and/or accidents with our customers as well as in implementing consultation activities to the victims of such disasters. Under these circumstances, the GIAJ hosted 2 disaster prevention events: "The Exploration for Disaster Prevention Forum" and "Radio Forum" during the United Nations World Conference on Disaster Reduction held in January 2005 in Kobe. Thanks to the large number of participants these two events were a great success.
I believe that the participants recognized our enthusiasm for loss prevention and the vital role of the general insurance business through these events. We will continue and further extend our disaster prevention activities as one of the GIAJ's priorities.

c. Automobile theft prevention

The number of automobile thefts in 2004 was 58,737, an 8.5% fall compared to the previous year's figure of 64,223, with the number falling below 60,000 for the first time in 4 years. The decrease owed much to the active involvement of both government authorities such as the National Police Agency, and the private sector in automobile theft prevention activities. It is important for us to take further effective automobile theft prevention measures so that the number of thefts will steadily decrease in the future.
The GIAJ made an education video on automobile theft prevention in this February to make the facts known and introduce preventive measures and provided it to each prefectural police department, driver's license centers and driving schools, etc. In addition, we held a workshop to study fraudulent tricks related to automobile thefts in Aichi prefecture in cooperation with the Japan Automobile Manufacturers Association, Inc. and Japan Security Systems Association and gave information calling for attention to the participants, including representatives of automobile manufacturers.

d. Crime prevention in local communities

The GIAJ has encouraged crime prevention activities by local communities since last year and presents an award to communities which take exceptional anti-crime measures to increase crime prevention awareness. This year, the award presentation ceremony will be held on March 18. We will compile examples of these exceptional awareness-raising activities in a brochure and distribute it to the public through crime prevention bodies and general insurance agents. We hope to make a contribution to stopping crime by expanding these activities further.

(3) Response to Personal Information Protection Law

The Personal Information Protection Law, enacted in May 2003, will fully come into effect on April 1, and we have little time left. Based on the Guidelines on Personal Information Protection in the Financial Industry, which were issued by the FSA, the GIAJ compiled its own compliance guidelines. The member companies of the GIAJ shall pay due attention to the guidelines and implement it from the effective date.
The GIAJ prescribes the guidelines in accordance with the characteristic features of the general insurance business such as specifying the purpose of personal information collection on its website and application forms for insurance products of our member companies.
Based on the guidelines each member company is formulating a system to comply with the Law. The GIAJ is applying the FSA to be designated as information protection body to assist their compliance activities.

(4) Further financial soundness of insurance business

In the "Program for Further Financial Reform", the Financial Services Agency promotes the implementation of rules related to the financial soundness of insurance companies, such as the technical provision for newly introduced insurance products and monitoring of this provision. As a part of this promotion, the FSA has established a task force to study the rule for technical provision, monitoring framework for the adequacy of technical provision and other issues related to third sector insurance products and it has already started the study. Some members of this task force are representatives of our member companies. With the rapid aging of the population resulting from the decline in the birthrate, third sector insurance products, which are expected to lead the expansion of our market, will be the key to our business. Therefore, we will be proactively involved in this task force to establish appropriate rules.

3. Revision of the Insurance Business Law

Based on the report concerning how to deal with unregulated Kyosai and revision of the policyholders protection system, compiled by the Second Subcommittee of the Financial System Council in December 2004, a bill to amend the Insurance Business Law was submitted to the Diet. If the bill is enacted in the Diet session and is enforced, unregulated Kyosai will be regulated by Insurance Business Law and fall under the FSA supervision. The new safety net system reflects the characteristic point of non-life insurer's policyholders protection, namely that to secure claims payment is important for general insurance which aims to cover against damage, such as Non-Life Insurance Policy-holder Protection Corporation guarantees 100% of claims for 3 month after insolvency and policyholders of the insolvent insurer will be encouraged to replace their policies with a financially sound insurers. We will do our best to establish a better policyholders protection system and publicize it to customers.

We have almost finished the fiscal year 2004 which saw several big events such as catastrophic natural disasters, revision of the Insurance Business Law and release of the FSA's "Program for Further Financial Reform". Considering the possibility of cut-throat competition and changes in the structure of the financial market in the future, these events and our challenges thereto were really important experience for us. We, the general insurance industry, will continue to be proactive in our missions by asking ourselves what the customer's and/or social expectations are towards us. We hope for your continued support of the industry.