GIAJ Chairman’s Statement
released on 19th June, 2008
(June 19, 2008

Looking back over my year as Chairman of the GIAJ, I would like to report on our progress and achievements. Mr. Toshiaki Egashira, Chairman
Mr. Toshiaki Egashira, Chairman

Introduction


Firstly, I wish to extend our sincerest condolences to the victims of the Iwate/Miyagi earthquake that occurred last weekend. We, the general insurance industry, will make every effort to service and take care of our customers who were affected by this earthquake and will ensure prompt payment of insurance claims.

During the past year, restoring consumer confidence in our industry has been our number one priority. Last June, I assumed the office of Chairman of the GIAJ, and faced with regrettable incidents that had surfaced in 2005 and beyond, such as inadvertent non-payment of claims and premium miscalculations, I have spared no effort in delivering on my promise to make steady progress in reaffirming our industry’s reputation.

Working from the proposals produced by the “Advisory Panel to Listen to Consumers’ Voices” that consists of external experts, we put together a comprehensive programme dedicated to restoring consumer confidence in our industry; this includes making policy wordings easier to understand, improving the quality of agents and solicitors, promoting consumer understanding, and allocating more resources to resolving consumer complaints.

Moving forward, I believe it is important that we establish a sustainable cycle in which the growth and prosperity of our industry are fuelled by the consumer confidence we restore. We need to reach a point where we can advance our priorities from “restoring consumer confidence” to “competing on the quality of our business”. To achieve this, we need to continue to make good on our promises and increase the effectiveness of our efforts.

As for miscalculations of fire insurance premiums etc., I wish to take this opportunity to thank customers for answering our member companies’ confirmation surveys. For those customers whose insurance premium was miscalculated, I would like to express my deepest regret and sincerely apologize for the trouble that we have caused.

Member companies have given top priority to this issue; solicitation procedures have been comprehensively reviewed and significant resources allocated to conduct an exhaustive check of all policies. This required the collective effort of all staff and agents. The GIAJ supported such measures through public communication initiatives (such as TV and newspaper advertisements) calling for consumer understanding and cooperation.

Member companies now are in the process of implementing both corrective and effective follow-up measures. As part of such follow-up measures, it was resolved in our Board of Directors Meeting today that the GIAJ and member companies will be running newspaper and website advertisements to publicize the services of our “Help Desk” and notify potential customers who have not answered our surveys that they may be eligible for reimbursements of insurance premiums.

Since insurance deregulation began in 1998, general insurers have tended to compete on the number of products and services offered, as well as by lowering prices (achieved through company-specific efforts). We believe that the failure on the part of insurers to align their solicitation procedures with the constant changes in products, market conditions, and sales practices is what caused premium miscalculations to occur.

Insurers and their agents now follow a procedure that requires them to double-check customer needs and contract details when selling a policy. To complement this, the GIAJ will also be promoting related preventive measures that allow us to review solicitation practices, make insurance products more customer-friendly, and provide better training for agents/solicitors. Through the implementation of this “review – analyze – evaluate – take action” cycle, we believe that we can increase the level of effectiveness of our efforts.

Looking back over the past year:
Main measures aimed at restoring consumer confidence in our industry

1. Measures and actions supporting GIAJ member companies

(1) Making our policy wordings and technical terms more consumer-friendly

As many customers have told us that the policy wordings currently produced by our members’ 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”. In addition, in order to further our promotion of consumer understanding of insurance products, we have set out a “Guideline on technical terms used in wordings and solicitation materials” to assist member companies in their ongoing work in this area.

(2) Improving the quality of agents and solicitors

In order to improve the quality of the insurance professionals with whom our customers deal directly, we have revamped the examinations for agents and solicitors. We now also require agents and solicitors to renew their credentials every five years. In addition, we have established a new “insurance product learning system” to assist professionals in advancing their knowledge of new insurance products.

(3) Disclosing statistics on the payment of insurance claims

To support member companies in their efforts to prevent the recurrence of inappropriate non-payment of claims, we will be disclosing the status of third sector insurance claim payments by each of our members. (We plan to start this from the second half of 2008.) We will continue to improve our efforts regarding public disclosure.

(4) Establishing a PDCA cycle based on consumer feedback

In order to review and revise our existing guidelines based on consumer feedback (such as the requests and suggestions made and collected by consumer-related government agencies), we have established a PDCA cycle system. Based on this exercise, we have decided to revise two publications, namely the “Guideline for Description of Solicitation Materials, etc.” and the “Compliance Guide for Solicitation”. We will continue to strive to raise the quality of our business by better reflecting consumer feedback in our business practices.

(5) Follow-up on the efforts of our member companies’

In order to increase further the effectiveness of our measures and actions dedicated to restoring consumer confidence, we will follow up on the various efforts of our member companies’, and facilitate the implementation of selected best practices. (We have begun work on our guidelines on payment of insurance claims and existing measures to enforce appropriate underwriting of fire insurance etc.) We will continue to expand the scope of our efforts in this area.

2. Measures and actions to be taken by the GIAJ

(1) Strengthening the GIAJ’s capacity to resolve consumer complaints

In order to take better care of unsatisfied consumers, we have strengthened the GIAJ’s complaint resolution functions. Specifically, we have allocated more resources to the advisory services of the General Insurance Counseling Department and also our arbitration facilities. Furthermore, in order to improve assistance to member companies in resolving problems with customers regarding investment-type insurance products and financial derivative products that they sell, we have become a “Certified Investor Protection Organization”.

(2) Comparison of insurance products

Together with the Life Insurance Association of Japan and Foreign Non-Life Insurance Association of Japan, we have hosted four rounds of “Free Discussion on Comparison of Insurance Products” since last July, and have released a report on our findings. We will open a dedicated portal information site on GIAJ’s website that is linked to the web pages of our member companies that show their product line-up. We are also considering releasing new publications, such as a Guidebook on the comparison of insurance products and a Guideline on disclosing insurance product information.

(3) Disclosing the number of consumer complaints for each member company

As part of our efforts to benefit from consumer feedback, we currently disclose on our website the number of complaints (per company) received by the GIAJ, as well as describing the kinds of measures companies are taking to resolve these complaints. In addition to this, we will soon begin disclosing the number of complaints directly received by each member company.

(4) 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 tools for promoting consumer understanding. 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”. Furthermore, to improve assistance to consumer-advocates and -advisors, we have produced a new “General Insurance Counseling Guide”.


Closing


The social and economic role played by general insurance as a safety net is a significant and perpetual one, and we recognize the importance of keeping our industry modernized in order to continue to meet appropriately the unique needs of society.

The Insurance Contract Law has been revised for the first time in nearly a century. The revision is intended to strengthen consumer protection, prevent insurance-related crimes, and provide a framework for a robust and sustainable insurance system: At the same time, the revised law allows insurers the flexibility to develop new products and meet various needs. Furthermore, the FSA has established a set of principles which financial firms are expected to follow as conduct guidelines. It is our understanding that while these principles may allow insurers to operate more freely, they will also demand a higher level of discipline on the part of firms.

Taking into account such new trends, we will 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. It is now important that we strengthen our capacity to support the measures and actions of our member companies, who will be continuing to pursue best practices.

Your continued support and guidance are greatly appreciated.