Chairman's Statement (Translation)
released on September 15, 2005
(Oct. 14, 2005

Two and a half months have passed since I took office as Chairman of the General Insurance Association of Japan (GIAJ), and I would like to look back upon the GIAJ's major activities and events during this period.

I would like to begin by expressing my sincere condolences not only to those who suffered from the typhoon and earthquake which recently struck Japan but also to the victims of Hurricane Katrina in the US.

I would also like to comment on the cases where claims payable under riders were not correctly paid at our member companies. Each member company is now making a thorough investigation to identify such cases and is making every effort to ensure prompt claims payment and development of preventive measures. I regret any inconvenience caused to our customers and those involved.

At the GIAJ's Board of Directors' meeting held today, we reaffirmed that the social mission of the general insurance industry is to realize the safety and security of people's and corporate activities through prompt and appropriate claims payment based on contractual coverage, and have ourselves determined that we should establish a system to ensure a proper response and necessary preventive measures with respect to the cases mentioned above.

Mr. Tadashi Kodama, Chairman
Mr. Tadashi Kodama, Chairman

1. Environment surrounding the General Insurance Industry and its Business Trend

The Japanese economy has improved in both household and industrial sectors, thus continuing to show signs of moderate recovery. Business results for the first quarter of fiscal 2005 for our member companies have shown the first upward trend since the same quarter in 2003, and the total amount of direct premiums written by all classes of general insurance registered 2,352.4 billion yen, 0.8% up over the previous year.

On the other hand, the following natural disasters and simultaneous multiple terrorist attacks in the UK cast a shadow of anxiety over both people's and corporate activities. [ an earthquake which occurred off the coast of Miyagi Prefecture, Typhoon No.11 and No.14 which hit Japan, and Hurricane Katrina which caused unprecedentedly serious damage in the US.]

The estimated amount of claims payment for the earthquake mentioned above and Typhoon No.14 has reached nearly 60 billion yen. Under the circumstances, the non-life insurance industry intends to make further efforts to implement its social mission to support the security of the individual, and social and economic activities.

2. Specific Activities

The following outlines the major activities carried out by the GIAJ so far, and the activities to be implemented in the future.

(1) Further Enhancement of Consumer Services

The GIAJ is always trying to make its website more user-friendly and increase the quantity of information for the sake of customers' benefit and better understanding, and has introduced basic information and measures related to flood and windstorm damage by upgrading the page concerned.

With respect to the bills to the Enforcement Ordinance and the Enforcement Regulations of the Insurance Business Law regarding "Small-amount and Short-term Insurers", which are now under public comment procedures, the GIAJ intends to state its position in representing the member companies, taking into account the viewpoints of customers.

As for major ongoing activities to be implemented by the GIAJ, we will strive to further enhance consumer services and strengthen communication with consumers by arranging meetings with consumer advocate groups and consumer policy agencies in every region of the country, as well as providing even more information on our website.

(2) Carrying out Social Responsibility

On August 27, 2005, as part of a public relations campaign for earthquake insurance, the GIAJ held a "Forum for Earthquake Experience" inviting presenters from 101 private radio stations all over the country. For the first time, the GIAJ organized a disaster-preparedness drill and earthquake experience simulation into the program and the presenters learned how to respond at the time of an earthquake. The presenters then passed on the information about disaster prevention measures and the necessity of earthquake insurance to their listeners via their own radio broadcasts in every region of the country.

In addition, the GIAJ compiled the second collection of "Flood Hazard Maps" and distributed complimentary copies to prefectural and city governments and local municipalities (about 2400 local governments in total) to facilitate a production of their own maps in every region with reference to those maps. As a result of the revision of the Flood Prevention Law in July 2005, local governments have been obliged to make their own flood hazard maps and distribute them to local residents.

Concerning activities for crime prevention, as a measure against the increasing number of automobile theft cases, the GIAJ promoted the 5th Round of the Nationwide Automobile Theft Prevention Campaign from September 1, 2005, by the Joint Automobile Theft Prevention Project Team which comprises both government authorities and the private sector. The number of automobile theft cases has been on a downward trend thanks to the various effective measures since 2003 when the number marked the worst ever record of 64,223 cases. In 2004, the number decreased by 8.5% to 58,737 cases, and during the period of January 1 through July 31 in 2005, it further decreased by 16.8%. In order to ensure that this trend continues indefinitely, the GIAJ will hold various events and take anti-theft measures in every region of the country, by designating October as the "Month for Automobile Theft Kickout".

As one of the environmental preservation activities closely connected with the general insurance business, the GIAJ has been promoting "Eco-Safe Driving" concept, focusing on environmental awareness in driving and road safety. As explained in the news release yesterday, we will distribute copies of a newly-designed leaflet and stickers, and hold a "Symposium for Eco-Safe Driving" in December 2005. Through these initiatives, we hope our attitude of environmental preservation will further spread into every part of society.

Furthermore, as a major activity in the area of social responsibility, the GIAJ will publish a new version of a "Corporate Social Responsibility Report" at the end of this September, promote the "Exploration for Disaster Prevention" program, and prepare a "Teaching Manual concerning Education for Disaster Prevention" for school teachers.

(3) Contribution to the Global Community

In July 2005, the GIAJ held the 12th Session of the "Insurance School of Japan (ISJ) Overseas Seminar" in Hanoi and Hochiminh City under the theme of "Automobile Insurance and Road Safety". The session ended successfully drawing more than 200 participants from insurance companies, insurance-related organizations, and regulatory agencies.

In the following month, the GIAJ welcomed a delegation from the Department of Insurance from the Ministry of Commerce, Thailand, and made presentations about the deregulation of the Japanese insurance market, an outline of the automobile insurance business, and disaster prevention activities carried out by the GIAJ.

In November 2005, the GIAJ will hold the 34th Session of the ISJ General Course in Japan under the theme of "Commercial Risks" which is designed for participants from insurance supervisory authorities and insurance companies in the East Asian regions. We will continue to support the sound development of the East Asia insurance industry through the introduction of Japanese insurance systems, business models, and experiences.

(4) Requests and Proposals

At the GIAJ's Board of Directors' meeting held today, the GIAJ approved and decided the "Requests for Fiscal 2005 Tax Reform". This year again, we intend to propose the following issues as priority ones:

a. Creation of premium tax deduction systems to respond to immediate social needs

(a) To create a new premium tax deduction system for insurance products that will supplement the social security system including medical expenses insurance, nursing care expenses insurance, and individual annuities.
(b) To create a new premium tax deduction system for earthquake insurance on dwelling risks.

b. Enhancement of the tax system for catastrophe reserves related to fire insurance, etc.

c. To raise the rate for the exclusion of dividends from gross revenue

Concerning the "Request for Regulatory Reform", the GIAJ submitted its position paper to the government on June 29, 2005. Subsequently, the responses from each administrative agency were released on August 12, 2005. Aiming at the realization of our requests, we will address ourselves to the authorities and the parties concerned, so that our requests will be duly included in the "Three-Year Program for Promoting Regulatory Reform and Opening Business to the Private Sector" which will be published at the end of March 2006.

As for proposals to international organizations, in August 2005, the GIAJ submitted its position in representing the general insurance industry on the "Draft Supervisory Standard on Suitable Forms of Capital" and the "Draft Guidance Paper on Finite Reinsurance" prepared by the International Association of Insurance Supervisors (IAIS). We intend to continue such activities by taking the opportunity to attend international meetings including the IAIS Annual Meeting to be held in October 2005.

3. Conclusion

In response to the anxiety towards the natural disasters and crimes, I endeavor to do my utmost, aiming at the GIAJ's catchphrase for this year, "General Insurance Industry Supports You, Your Community and Society".