Chairman's Statement (Translation)
released on March 16, 2006（April 27, 2006）
1. Environment and Trends in the General Insurance Industry
The Japanese economy, supported by favorable corporate and household sectors such as growth of corporate earnings and increase in corporate investment as well as in consumer spending resulting from improvement of the employment and personal income environment, has steadily been showing strong signs of expansion.
Under these circumstances, the amount of direct premiums for all classes of insurance written by the GIAJ member companies in the third quarter of fiscal 2005 (April to December) increased slightly, by 0.2% to 5,719.1 billion yen, excluding the savings portion of maturity-refund-type insurance. This means that the amount of direct premiums as at the third quarter ended up at almost the same level as in the corresponding period one year earlier. Direct premiums for fire, marine, and inland transit insurance registered a positive growth on a year-on-year basis thanks to both the increase in new housing and brisk exports. However, when the savings portion of maturity-refund-type insurance is included, the amount of direct premiums for all classes of insurance decreased by 0.9% to 6,545 billion yen due to the effects of the decrease in standard premium rates of Compulsory Automobile Liability Insurance. (Figures are for 20 member companies, excluding 2 professional reinsurance companies.)
With respect to financial administration, almost one year has passed since the Financial Services Agency (FSA) published the timetable for the "Program for Further Financial Reform" in March 2005 with the aim of realizing the new financial system. During this period, various issues have been deliberated upon and policy initiatives have been implemented based on the timetable in order to enhance users' convenience and to establish rules for their protection. With respect to monetary policy, the business environment surrounding the general insurance industry has been moving into a new phase, where the Bank of Japan, at its Monetary Policy Meeting, decided to scrap the quantitative monetary-easing policy, in response to the changes in various economic indicators reflecting an economic recovery.
2. Specific Activities
The following outlines the major activities carried out by the GIAJ during the last quarter, and future activities to be implemented.
(1)Further Enhancement of Consumer Services
To enhance understanding of general insurance and to prevent misunderstanding thereof, we published the "General Insurance Buyers' Guide" which brought together information on the important matters that potential customers should note when effecting an insurance contract. This guide is written in concise and clear language, and was uploaded to our website on January 23, 2006. In addition, we drew up an enlightening pamphlet and distributed it to consumer policy agencies and consumer affairs centers throughout the country. The guide is based on the interim report which was published by the FSA's Study Team on Sales and Solicitation Methods of Insurance Products in July 2005. The guide is compiled from the viewpoint of customers and classified by fire (including Earthquake Insurance on Dwelling Risks), automobile, personal accident, and medical insurance, which are all popular forms of insurance with consumers. It also provides consumers with information about potential problems as well as information on such enquiries and complaints as have been submitted to the General Insurance Counseling Offices of the GIAJ. We intend to further promote consumers' better understanding of general insurance, by preparing and distributing a pamphlet which gives detailed information about the guide in plain language, as well as having consumer groups provide a link to the website of the GIAJ.
Furthermore, as a guideline for our member companies to use when they provide consumers with appropriate information at the time of insurance sales and solicitation, we compiled the "Guideline for Policy Summary and Attention-calling Information". Based on this guideline, our member companies will prepare a document describing the characteristics of their insurance products, thus making efforts to ensure that their customers better understand their insurance products. This guideline is available on the website of the GIAJ.
(2) Carrying out Social Responsibility
To prevent the frequent occurrence of automobile theft cases, the GIAJ has been actively participating in various initiatives throughout the country, including those of the Government-Private Sector Joint Automobile Theft Prevention Project Team. As a result of these efforts, the number of automobile theft cases fell, by 12,009 or 20.4% over the previous year, to 46,728 in 2005, according to the National Police Agency. This was the first time since 1999 that the number had fallen below the 50,000 level.
We recognize that this drop in automobile theft is the result of various measures to prevent such incidents, including the efforts by the above-mentioned project team, the general insurance industry and related industries, as well as strengthened efforts by the National Police Agency.
In order to ensure that this trend continues indefinitely, the GIAJ will continue to conduct activities in local communities, especially in Chiba Prefecture, Ibaraki Prefecture, and Gunma Prefecture where the number of automobile theft cases is showing an upward trend. Our activities include placing signboards in parking lots of convenience stores and monthly parking spaces to alert the public to this danger, and holding discussion meetings to facilitate prevention of automobile theft.
With respect to the "Exploration for Disaster Prevention" program, which is a hands-on educational program for elementary school children concerning disaster prevention and crime prevention, we held the 2nd "Exploration for Disaster Prevention Forum" on January 21, 2006 and at a panel discussion we exchanged views on the ideal way of education for children on disaster prevention, which is closely connected with local communities. An award ceremony was also held for the Disaster Prevention Map Contest, and the activities of the Exploration for Disaster Prevention program were outlined. Given that large-scale natural disasters occur all over the world, this program has gradually been expanding internationally, and in fact, the above-mentioned forum was introduced on the website of UNESCO. In addition, we published a "Guidebook for School Teachers on the Exploration for Disaster Prevention Program" and distributed it to educational commissions and elementary schools, so that education for disaster prevention can be effectively carried out in classrooms.
From the viewpoint of mitigating the loss or damage caused by crimes which happen close to home, the GIAJ, under the auspices of the National Police Agency, commends excellent crime prevention efforts made by local volunteer organizations through its "National Anti-crime Award for Local Anti-crime Activities". On February 20 this year, we commended eight organizations out of the 230 organizations which applied for the 3rd National Anti-crime Award for Local Anti-crime Activities. The number of volunteer organizations has been increasing recently in response to the frequent occurrence of crime, and we will promote the further expansion of such local anti-crime activities in order to realize safer and more secure local communities for the future.
Our member companies have taken measures to grant a moratorium on premium payment and policy renewal to policyholders who suffered from large-scale natural disasters. In February this year, we received a certificate of gratitude from Miyake-mura Village which suffered from the eruption at Miyake-jima Island because such measures as well as prompt claims payment were appreciated by the village. We believe that we made a contribution to the recovery of local people who had been forced to live as evacuees for an extended time. On February 1 this year, as a measure similar to that for natural disasters, we also applied the same kind of moratorium measures for policyholders of Earthquake Insurance on Dwelling Risks who had received deportation orders due to problems caused by false representation of the earthquake-resistance of their condominiums.
(3) Contribution to the Global Community In December 2005, the 6th WTO Ministerial
Conference was held in Hong Kong, and the GIAJ participated in the Conference as a member of the delegation from the Nippon Keidanren (Japan Business Federation). We made appeals on the importance of liberalizing service sectors including insurance in cooperation with the private sectors in Europe and the United States, as well as making requests and providing information to the negotiators from the Japanese government. Thanks to the efforts of the participating governments including the Japanese government, an annex concerning services was incorporated into the Ministerial Declaration, and we believe that this will serve as a stepping stone for future negotiations on the liberalization of trade in services.
(4) Making requests and proposals
With reference to matters related to the Program for Further Financial Reform, bills to partially revise the Enforcement Regulation of the Insurance Business Law and the Comprehensive Supervisory Guidelines for Insurance Companies were put forward for public consultation in order to ensure flexibility in the calculation of loading premium rates and to establish a rule for premium reserves in the third sector products such as medical insurance and nursing care insurance. We put together requests from our member companies from the viewpoint of maintaining business soundness and ensuring consistency with existing practices, and submitted these to the FSA. In addition, as to revised regulations concerning small-amount and short-term insurers, the opinions of our member companies were reflected in the revised regulations by FSA, and we believe that this will help to further enhance the protection of consumers. The GIAJ has been requesting the creation of a premium tax deduction system for Earthquake Insurance on Dwelling Risks since 1996, as one of its priority requests for tax reform. The creation of such a deduction system is now being deliberated in the Diet, and we think that this represents a significant success of our continued efforts in this matter. In relation to this, the Non-Life Insurance Rating Organization of Japan announced that the number of contracts of Earthquake Insurance on Dwelling Risks exceeded 10 million as at the end of December 2005. With the creation of the new tax system as a trigger, we intend to make efforts to conduct public relations activities in cooperation with the government, thus further adding momentum to this swell in the ownership of Earthquake Insurance on Dwelling Risks.
With just a little time before the end of fiscal year 2005, we intend to continue to do our best, with the aim of being a "general insurance industry which supports you, your community, and society". We would appreciate your continues support and cooperation.