GIAJ Chairman’s Statement
released on 21st March, 2008（March 21, 2008）
It has been nearly a year and a half since we established the "Advisory Panel to Listen to Consumer Voices" consisting of external experts in order to better work off customer feedback. We have implemented many of the measures proposed by the Panel such as making policy wordings easier to understand, improving the quality of agents and solicitors, and allocating more resources to resolving customer complaints: I believe we now have a fairly comprehensive programme dedicated to restoring consumer confidence in our industry. We now need to continue to deliver on our promises, increase the effectiveness of our efforts and further improve the quality of our business.
In order to widely communicate our various initiatives in this arena and others such as environmental conservation and disaster prevention, we have recently published our "Social Responsibility Report: Creating a firm bond of trust with customers through general insurance": In this new publication, we not only provide a full report on our activities, but also ask the general public for their opinions on how we can become a better industry. I sincerely hope that people will let us know what they think of our work.
As one of the pillars of its "Better Regulation" initiative, the FSA is currently advancing its efforts to implement more "principles-based" regulatory approaches in its supervisory practices. It is our understanding that while these "Principles" may allow insurers to operate more freely, they will also demand a higher level of market discipline on the part of firms. Taking note of these trends on the regulatory front, we will begin deliberations on what kind of organization the GIAJ ought to be, and what kind of role it could play in the future.
Last December, the FSA released the "Strengthening the Competitiveness of Japan's Financial and Capital Markets Plan." Furthermore, the Insurance Contract Law has recently been introduced to parliament. As the general insurance industry, we will further strive to provide improved, high-quality services to the market and contribute to our country's economy while giving special attention to customer convenience and consumer protection.
Specific measures and actions
1. Measures aimed at restoring consumer confidence in our industry
(1) Measures and actions supporting GIAJ member companies
(i) Following up on various measures aimed at restoring consumer confidence
In order to further increase the effectiveness of our measures and actions dedicated to restoring consumer confidence, we will follow-up on our member companies' various efforts and facilitate the implementation of selected best-practices. We will start working on the following items and areas:
(a) "Self-Imposed Guideline on Payment for Insurance Claims"
(b) "Guidelines for 3rd Sector Insurance Products"
(c) Measures to enforce appropriate underwriting of fire insurance etc.
(ii) Publishing the "Guideline on making Insurance Policy Wordings more consumer-friendly"
An insurance policy wording sets out the rights and obligations between an insurer and its customer. As many customers have told us that our members' current wordings are difficult to read and that it takes too much time to find the information they are looking for, we have published a "Guideline on making Policy Wordings more consumer-friendly." We hope this will assist member companies in their ongoing work in this area.
In addition, in order further to promote consumer understanding of insurance products, we plan very soon to set out a separate guideline on reviewing and amending the technical terms used in wordings and solicitation materials.
(iii) Introducing an industry-wide learning system for insurance products (Introducing a specialized examination
on insurance products)
In order to improve the quality of insurance agents/solicitors whom our customers deal with directly, we will introduce an improved industry-wide learning system for insurance products (namely, a specialized examination on insurance products) this November. In principle, all agents/solicitors will be required to take this examination every five years to renew their credentials. We believe that assisting agents/solicitors to deepen their knowledge of insurance products will help to prevent incidents such as the miscalculation of premiums from ever reoccurring.
(2) Measures and actions to be taken by the GIAJ
(i) Strengthening the GIAJ's capacity to resolve consumer complaints
In order to take better care of unsatisfied consumers, we will strengthen the GIAJ's complaints resolution functions. Specifically, we will allocate more resources to the advisory services and the arbitration facilities of the General Insurance Counseling Department. Furthermore, to better assist member companies resolve problems with customers regarding investment-type insurance products and/or financial derivative products that they sell, we became a "Certified Investor Protection Organization" on 7th March.
(ii) Promoting consumer understanding (Our three core Buyers' Guides)
To help consumers to understand general insurance better and feel more confident about the policies they are purchasing, we are constantly improving our consumer understanding promotion tools. In addition to our "General Insurance Buyers' Guide" and "Good to Know Guide -Easy reference on how to buy insurance", we have recently published a new guidebook, our "Freshers' Guide." We will actively work on promoting these tools as we approach our national consumer awareness month in May.
(iii) Free discussion on Comparison of Insurance Products
We held the third round of the "Free discussion on Comparison of Insurance Products" on 25th January. Using a sample sheet showing a mock-comparison of automobile insurance products etc., we discussed what kind of comparisons benefit consumer convenience without being misleading, and what kind of items and information should be covered in such papers as a minimum. The fourth round of discussions will be held on 16th May and will focus on the people and firms that will be allowed to publish such comparisons.
(1) Measures to promote security and safety in our society
(i) Raising the general insurance industry's quantitative goals on waste reduction
The GIAJ and our member companies have long been strong advocates of ecologically-friendly business practices: we have set out Action Plans on environmental conservation and received ISO14001 certifications, and we offer related products and/or other services in this field. We have now decided to raise our goal to reduce the waste produced by our Tokyo office by more than 33 % compared to 2000 (our previous goal was to reduce it by more than 20%). We hope to achieve this by 2010.
(ii) Compulsory Automobile Liability Insurance promotion
Compulsory Automobile Liability Insurance (or CALI) is a highly public class of insurance designed to save traffic accident victims: it is compulsory for all registered vehicles and motorbikes to have a CALI policy. In addition to serving the public through claim payments, our industry has utilized the investment income on CALI premiums to promote various public initiatives such as traffic accident prevention and accident victims assistance. We have decided to allocate over 2 billion Yen to such initiatives in fiscal year 2008. In addition, we will be running a CALI promotion campaign to raise public awareness of policy expirations. Please visit out website for more details.
(iii) Research study on insurance fraud
Despite the significant role insurance plays in covering the public's economic losses, there are those who try to make fraudulent claims because of the possibility of receiving a large payment from an insurer for a small amount of premium. In order to maintain a stable and sustainable general insurance system, we ask the public to join us in our fight against insurance fraud. We will soon be publishing our "Research on Insurance Fraud in our Country" for law enforcement authorities. We will continue to raise public awareness of the reality of insurance fraud and the necessity to eliminate it.
(2) Measures related to system reform
(i) Preparing for changes in the Insurance Contract Law
The Insurance Contract Law, which is being revised for the first time in nearly 100 years, was introduced to parliament this session. Members of our industry participated in the deliberations held by the Legislative Council, and voiced opinions directed at ensuring that the new law will not only set out rules that adequately meet the modern needs of consumer protection and the prevention of insurance-related criminal acts, but also contribute to product development and the promotion of a sound insurance market. Being mindful of the law's purpose, we will proceed with necessary preparations such as getting ready to change policy wordings, IT systems, administrative processing etc.
The Financial System Council has also deliberated on revising the Insurance Business Law in line with the expected changes in the Insurance Contract Law, and on 31st January, they released their report "Dealing with changes in the Insurance Contract Law." Taking the contents of this report into consideration, and as part of our own efforts on dealing with moral risks, we have decided to set out a self-imposed guideline to assist member companies to apply a limit on insured amounts for policies taken out on minors, and improve their underwriting processes in relation to such accounts. We will continue to advance our work on this issue.
(ii) Revising the Solvency Margin Ratio scheme
The FSA released in February an exposure draft of its plans for the short-term revision of the current Solvency Margin Ratio scheme, and is currently seeking opinions from the public. Its plan proposes to revise risk coefficients, raise the system's level of confidence, and expand the scope of items that do not qualify as an eligible margin. We plan to submit our opinions so that the scheme is revised in a way that better captures/reflects the risks of each insurer.
Upon assuming the office of Chairman of the GIAJ last June, I announced that restoring consumer confidence in our industry would be our number one priority: Since then, we have implemented many measures and actions to achieve that goal, including those supporting GIAJ member companies.
For the remaining three months of my tenure, I will continue to fulfill my duties as Chairman of the GIAJ by executing our initiatives one by one and striving to earn a reputation for the industry of having created a firm bond of trust with customers through general insurance.