Chairman's Statement (Translation)
released on December 15, 2005
(March 6, 2006

I would like to report and comment on our activities and events that were implemented or that occurred since my last Statement in September 2005. Mr. Tadashi Kodama, Chairman
Mr. Tadashi Kodama, Chairman

1. About the cases where claims payable under riders were not correctly paid

I regret that our 19 member companies committed incorrect payment under riders. It was determined that administrative measures be taken by the Financial Services Agency (FSA).

I recognize that the social mission of general insurance companies is to ensure safety and security in peoples' lives and corporate activities through appropriate and prompt claims payment. Each member company has already started taking measures to prevent the recurrence of such cases. We, the GIAJ, would like to further encourage each member company to establish and strengthen a system to prevent the recurrence of such regrettable cases, and to ensure prompt and appropriate action toward claims.

2. Environment and Trends in the General Insurance Industry

The Japanese economy has increasingly been showing bright signs of recovery, such as the increase in corporate investment, the recovery of domestic demand supported by the improvement of household income, and the rise in stock prices as well. As for the general insurance industry, the total interim net profits of our 9 member companies have also significantly increased to 97.6 billion yen, up 171.9% on an year-on-year basis, thanks to the increase in premium income from both the commercial and the personal lines reflecting the economic recovery, the considerable decrease in claims payments for natural disasters, and each companies' continuous efforts in promoting business efficiency.

On the other hand, we have witnessed successive malicious crimes and other tragedies that have jeopardized people's daily lives. Under these circumstances, in addition to our member companies' general insurance business, we feel the growing importance of the social responsibility activities that the GIAJ has been carrying out so far in order to mitigate losses or damages resulting from crimes and natural disasters as well as its measures to strengthen communication with local communities through these efforts.

3. Specific Activities

The following outlines the major activities carried out by the GIAJ during last quarter, and the activities to be implemented in the future.

Further Enhancement of Consumer Services

The GIAJ has been engaging in various activities so that consumers can have a better understanding of the necessity and details of general insurance products. As a new initiative for this year, we, in conjunction with a Buyers' Guide which is now being drawn up, will prepare an enlightening pamphlet and video from the viewpoint of consumers by the end of next March, and distribute them to local consumer affairs centers throughout the country.

In addition, in order to contribute to the further enhancement of consumer services by member companies, the GIAJ has been giving feedback to member companies each month on complaints filed to the GIAJ's counseling offices as well as providing information classified by the details of complaints on a quarterly basis. In relation to this, the GIAJ also put together the results of its meetings with consumer policy agencies and consumer advocate groups which were held 12 times this year, and has provided such information to member companies on the occasion of various committee meetings.

(2) Carrying out Social Responsibility

As one of our social missions, the GIAJ has been actively promoting various activities to mitigate loss or damage caused by natural disasters and crimes, and I myself have participated in various events. The whole of the GIAJ, including its branch offices throughout the country, has worked together to carry out various activities since this September.

The GIAJ has been promoting the "Exploration for Disaster Prevention" program, which is a hands-on educational program designed to guide children to enhance their "awareness of disaster prevention" and their "concern about communities". In the program, children encounter people in their community and find facilities related to disaster and crime prevention through enjoyable exploration of their towns. As of the end of November, we had received a total of 238 applications for participation from organizations throughout the country, which is more than twice as many participants as last year. In fact, I myself participated in the program, and was impressed with the children's very active and serious attitude toward the program. Recently, there has been an increasing number of tragic events involving children. Under the circumstances, in cooperation with local communities, we intend to actively promote this program as one of the measures against natural disasters and crimes.

With reference to the measures to prevent the frequent occurrence of automobile theft cases, the "Government, Private Sector Joint Automobile Theft Prevention Project Team" is now conducting the 5th Nationwide Automobile Theft Prevention Campaign, which runs for one year from September 1, 2005,. The number of automobile theft cases marked the worst ever record of 64,223 in 2003. However, the number is showing a downward trend thanks to the effects of this campaign. The number of automobile thefts decreased to 58,737 in 2004, down 8.5% on a year-on-year basis, with a further decrease of 19.3% from January to October in 2005 over the corresponding period of the previous year.

In order to ensure that this trend continues indefinitely, the GIAJ designated October 7 as "Theft Prevention Day" and has conducted a campaign where people from the general insurance industry appeal to the public in front of major railway stations all over the country about the necessity of anti-theft and anti-crime measures. This year, the GIAJ has strengthened the activities by designating October as the "Month for Automobile Theft Kickout".

I myself visited seven cities throughout the country; Osaka, Yokohama, Tokyo, Fukuoka, Hiroshima, Sendai, and Nagoya, where, with the cooperation of the local police departments, we held events to enlighten participants on the prevention of automobile theft , and through the local media we strongly promoted the necessity of such measures and specified the current situation regarding automobile theft.

The social responsibility activities of the GIAJ are reported fully in its "Corporate Social Responsibility Report 2005" which was published at the end of September 2005.

(3) Contribution to the Global Community

As I mentioned above, as one of the measures against natural disasters and crime, the GIAJ promotes the "Exploration for Disaster Prevention" program. This program has been well received overseas, and in fact, it was mentioned on the website of UNESCO as well as on the occasion of the OECD Insurance and Private Pensions Committee meeting.

In consideration of the frequent occurrence of large-scale natural disasters all over the world, the GIAJ has also introduced the program at international meetings such as the IAIS annual meeting held in Vienna this October and the Seminar on Reinsurance for Insurance Supervisors of ASEAN countries held last November, so that it will be further expanded internationally. One result of these efforts was that the "Exploration for Disaster Prevention" program was held at a school this year in Phuket, Thailand, an area which suffered from the giant tsunami in 2004, and we received an application from them for the Disaster Prevention Map Contest.

(4) Making requests and proposals

The GIAJ has already submitted its "Requests for Fiscal 2006 Tax Reform" to the government, and I believe that the ruling party is now in the final stage of discussion for the publication of the "Large Package of Tax Revisions for Fiscal 2006". We recognize that an active discussion is taking place on the "creation of premium tax deduction systems to respond to changes in social needs", which is one of our industry's high-priority issues, and we will continue to watch the development of this discussion.

Concerning the "Request for Regulatory Reform", the GIAJ submitted its position paper to the government on November 16, 2005. This is the second submission since that issued in June 2005. At present, the government is now deliberating on the requests submitted from every party concerned, and we recognize that the government report will be published in due course. As the "Three-Year Program for Promoting Regulatory Reform and Opening Business to the Private Sector" will be revised in March 2006, we will address the authorities and the parties concerned, with the aim of having our requests realized.

With respect to matters related to the Program for Further Financial Reform, bills to revise the Enforcement Regulation of the Insurance Business Law and the Comprehensive Supervisory Guidelines for Insurance Companies are now being put forward for public consultation. We will put together opinions from our member companies from the viewpoint of maintaining soundness and making sure of the consistency with existing business practice, and submit these opinions to the competent authorities. With respect to the "Investment Services Law (tentative name)", which is now being discussed at the First Subcommittee of the Sectional Committee on Financial System of the Financial System Council, we will continue to make an appropriate response and we have expressed our opinion that the discussion should take into account the characteristics of insurance products as investment products.

3. Conclusion

Almost six months have passed since I took office as Chairman of the GIAJ in June, and we are now approaching the end of this year. We have made the utmost efforts to come to grips with various issues. Next year, we intend to brace ourselves so that our efforts achieve greater reliability in the general insurance industry, aiming at a "general insurance industry which supports you, your community, and society". We would appreciate it, therefore, if you would continue to render the same support and cooperation as you have done so far.