GIAJ Chairman's Statement released on March 15, 2007 (Translation)（March 15, 2007）
It is unfortunate to observe inadvertent non-payment of claims in additional coverage, inappropriate non-payment of claims in 3rd sector insurance (such as health and medical expense insurance) and the need for voluntary inspection for improper underwriting including fire insurance. Regarding 3rd sector insurance, I regret that some of our member companies have been forced to suspend their business pursuant to administrative orders issued by the Financial Services Agency (FSA).
Both the General Insurance Association of Japan (GIAJ) and each member company take this situation with the utmost seriousness. Accordingly, we are taking various measures to restore consumers' and society's confidence as soon as possible.
With respect to the inappropriate non-payment of claims in 3rd sector insurance, member companies are making efforts to make prompt payment and prevent similar mishaps. Regarding inadvertent non-payment of claims in additional coverage, member companies are also exerting themselves to ensure full discovery and analyses, prompt payments of claims and prevention of a recurrence of similar cases by their self-imposed deadline of internal investigation. As for fire insurance policies, member companies are conducting internal investigations on all fire insurance contracts, which will be finished in about 1 year.
The GIAJ has been enhancing and supporting each member company's activities to restore confidence by making "Self-Imposed Guideline on Payment for Insurance Claims", "Guidelines on Description of Solicitations Materials", and the "General Insurance Buyers' Guide" available. The GIAJ has also been supporting each member company in carrying out internal investigations on fire insurance contracts. We will continue to strive to regain consumers' confidence in our industry as soon as possible.
2. Measures and actions
Main issues and activities since the last statement.
(1) Reviewing Industry Operation with Consistent Focus on Consumers' Voices and Opinions
(i) Holding the 4th "Advisory Panel to Listen to Consumers' Voices"
On March 1, 2007, we held the 4th "Advisory Panel to Listen to Consumers' Voices", in an effort to listen to consumers' voices and reflect their suggestions into business processes industry-wide.
In the Panel meeting, an "initiative to enhance the quality of general insurance agents", "Compliance Guide for Solicitation (draft)" and an "understandability of insurance products (policy conditions)" are discussed among the members of the Panel.
The Panel discussed and approved the "Qualification Renewal System for Present Agents / Solicitors" as its main focus regarding an "initiative to enhance the qualifications of general insurance agents". The Panel also issued a valuable comment about a "Compliance Guide for Solicitation (draft)", which is under discussion among the GIAJ to enhance compliance.
With respect to "understandability of insurance products (policy conditions)", the Panel suggested that the GIAJ should specifically discuss the understandability of insurance policy conditions as well as "solicitation tools" and an "improvement in the quality of general insurance agencies" in order to make it possible to provide consumers with easy-to-understand insurance policies. Following this proposal, we started discussing specific measures for accomplishing an "understandability of insurance products (policy conditions)" in each relevant committee.
(ii) Analysis, valuation and feedback of consumers' opinions
The GIAJ published the 3rd quarter edition of "the Report on Consumers' Voices" based on consumers' comments and complaints addressed to the GIAJ from October to December 2006. Beginning the fiscal year 2006, the GIAJ plans to publish this report quarterly for the purpose of analyzing various consumers' feedback and encouraging its member companies to respond. The report is available on the GIAJ's web site.
As highlighted in the 3rd quarter report, the number of comments and complaints was 28,970 during the period, an increase of 34.5% from 21,539 for the same period last year. Among the complaints, the number of cases in which the GIAJ was requested to support solving the problems within its member companies increased by 47.1% to 509, which was the largest increase ever. Among the complaints, those received from victims of traffic accidents were especially worth attention. Therefore, we informed each member company's executives of this feedback and urged further improvement in support of victims by describing it in the report.
We would like to continue to pursue the appropriate analysis and feedback, using this report as a tool.
(2) Reinforcing Compliance
(i) Implementing "internal investigations" to ensure appropriate underwriting
As we agreed at the board of directors' meeting last December, to ensure appropriate insurance underwriting, each member company is implementing internal investigations on fire insurance contracts. The purpose of these investigations is to identify if there were any mistakes in determining buildings' structures, application of premium discounts and setting insured amounts in their fire insurance contracts, particularly those contracts for buildings which are made by Autoclaved Light-weight Concrete or with the two-by-four method. Within a year, they will also investigate all other insurance contracts, such as automobile insurance contracts, by making use of opportunities of policy renewals.
At the GIAJ's board meeting, the board resolved to implement Public Relations activities to improve consumers' understanding and to support its member companies by sharing information about best practices to prevent the recurrence of errors, in addition to compliance with the "Suitability Rule" as follows:
(ii) Responding to the "Suitability Rule"
On April 1, 2007, the "Comprehensive Guideline for Supervision of Insurance Companies" will be revised, and each insurer must establish a system by which its customers can reconfirm by themselves that the insurance product meets their needs. Particularly, regarding life and medical insurance contracts, insurance companies are requested to prepare and issue a confirmation paper, based on the information collected from customers, which ensures that the product meets the customers' needs. Insurance companies are requested to take similar procedures in automobile and fire insurance contracts. The GIAJ made a standard form for the confirmation of customers' needs so that member insurers can make confirmations appropriately, taking the above-mentioned internal investigation of fire insurance contracts into consideration.
(iii) Establishment of a "Compliance Guide for Solicitation"
In the light of the "Suitability Rule" to be implemented in April 2007 and to enhance compliance in insurance solicitation, the GIAJ has established the "Compliance Guide for Solicitation". The findings of the internal investigations mentioned above and opinions from the "Advisory Panel to Listen to Consumers' Voices" were included in this compliance guide.
This guide summarizes the basic points regarding compliance in insurance solicitation, which are stipulated by Insurance Business Law, other relevant laws and supervisory guidelines. We expect that this guide will help raise the level of compliance in each company.
(iv) Discussing "Guidelines for 3rd Sector Insurance Products"
Prompt and appropriate payment for claims is the basic and most essential function of general insurers. The GIAJ previously issued "Self-Imposed Guidelines on Payment for Insurance Claims" in September 2006, in order to encourage appropriate management of claim payments in the industry. Considering the occurrence of inappropriate non-payment of claims in 3rd sector insurance, such as medical expense insurance, we are discussing the guidelines which incorporate basic points to be considered in the handling of the insured's notification and claim payment exclusively in 3rd sector insurance.
(i) Review of the Examination System for General Insurance Agents
The General insurance agency system, which was managed by the FSA's guidelines for business operation, was abolished in March 2001. Since then the current qualifying system for general insurance agents has been managed under each insurer's training / qualification system. In July 2005, the enhancement of agents' / solicitors' quality of service was mentioned as a necessity in the summary of "the FSA's Study Team on Sales and Solicitation of Insurance Products" report. In addition, the "Advisory Panel to Listen to Consumers' Voices" in December 2006 suggested that it was appropriate to have specific discussions on the improvement of the qualifications of general insurance agents to provide appropriate guidance on insurance products. For example, implementing examinations on common areas in the industry, such as basic insurance products, business practice, statutes, etc. Based on this suggestion, today's board meeting resolved that the GIAJ would overhaul the examination system for agents / solicitors, based on the following points:
a. Improving quality of examination for agents / solicitors
The examination should be more rigorous by adding subjects of common area in the industry, such as the process of insurance underwriting and relevant statutes, in order to increase its level of challenge. (To be implemented in November 2007)
b. Introducing qualification renewal system for agents / solicitors
A qualification renewal system for existing agents / solicitors should be discussed, which is supposed to be enforced in April 2008.
c. Establishment of an examination on expertise and improvement in efficiency of the current examination system
In response to the improper application of building categories in underwriting in fire insurance and inappropriate non-payment of claims in medical expense insurance, the GIAJ will discuss an examination of technical skills common to all general insurance agents and efficiency in examination systems by enhancing coordination between the association's exams and company exams.
(ii) Establishing the 4th Mid-Term Fundamental Business Plan
The GIAJ has established a Mid-Term Fundamental Business Plan since fiscal year 1998 and carried out its business based on this plan. At this time, we made the 4th Business Plan, which will start from April 2007. While the past 3 Plans were aimed at 3 years, considering the industry's situation, this Plan is aimed at the next 2 years so that we can respond quickly to restore consumers' confidence in our industry.
Specifically, we set "Restoration of Consumers' Confidence" as a top priority, which consists of "Enhancement of Communications with Consumers" and "Promotion of Compliance". The other three goals are "Strengthening the Base of the General Insurance Business", "Contribution to Social Safety and Security" and "Contribution to the Global Community".
About 7 months have passed since I assumed the chairmanship of the GIAJ, with just a little time before the end of fiscal 2006. We are still half way towards the restoration of consumers' confidence, and we should devote ourselves to a steady effort in the various issues.
With such an awareness of these issues, today's board meeting resolved that we would make every effort to achieve the quickest restoration of confidence as the pillar of our 4th Mid-Term Fundamental Business Plan.
We continue to carry out the following two challenges and agenda as top priorities; "paying respect and listening carefully to consumers' voices and then responding to them quickly and effectively" and "creation of a system in which each member company sorts out and addresses their issues by themselves and solves them proactively".