Working towards a more secure, safer society
- What we can do to bring smiles and vitality back to the people of Japan -（July 1, 2011）
The industry will continue to make unified efforts to help rebuild the affected people's lives, and for the prompt reconstruction of the affected areas.
1. The situation surrounding the general insurance industry
Before the Earthquake, the Japanese economy had been moving out of stagnation with healthy signs of exports and production picking up in line with the world economic recovery. However, this recovery has weakened again due to the disaster's negative influences - The slowdown in production and personal consumption has reduced corporate profits.
The economy is likely expected to remain sluggish for the immediate future due to the impact of the disaster. However, it is expected to get back on track once the recovery of production and the outcome of various policies have taken effect. Meanwhile, there are still certain issues, such as a limited power supply, a delay in the recovery of the supply chain, the crippled nuclear power plant situation, and a rise in crude oil prices, that could weaken the economy further. The impact of deflation and concerns about the worsening job market also remain.
The general insurance market of Japan will remain in a difficult position due to the aging and depopulation of society, the mature market conditions, as well as the above-mentioned factors.
The industry profitability is also challenged. Automobile insurance, which is a mainstay product in our market, is under severe pressure due mainly to the increased frequency of traffic accidents and the soaring prices of automobile parts, meaning that the loss ratio remains at a high level. Consequently, the underwriting results of an insurance core business are below the break-even point.
2. Roles and focus of the General Insurance Association of Japan
Difficult circumstances surround us, however, consumers and businesses have an increased awareness of risks following the Earthquake. The general insurance industry is expected to play an increasingly important role in ensuring protection and safety. It is strongly recognized that the industry should stand to demonstrate its value.
The GIAJ will make every effort in our post-disaster responses centered on encouraging prompt payments of insurance claims. Further efforts should be made to improve the market penetration of Earthquake Insurance, based on lessons learned from the disaster and the voices of consumers and businesses.
Our social mission is to continue providing our products and services in the effort to work towards a safer and more secure society. For this purpose, it is important to implement measures for the improvement in the quality of business processes, sustainable development, and the sound growth of the industry. As Chairman of the GIAJ, it is my role to take the lead to deliver these measures as expected.
3. The GIAJ's key activities
Based on the above-mentioned focus, we will prioritize the following activities:
(1) Unified post-disaster responses of the industry
We have taken various measures for prompt and proper payments of insurance claims since the occurrence of the Earthquake.
We will continue promoting these measures as our top priority. Moreover, through our member companies and relevant agents, we are reaching out to customers who have suffered from the disaster but have not reported the damage to their insurance companies. We are encouraging customers to report and make claims particularly in case of Earthquake Insurance.
(2) Improving the market penetration of Earthquake Insurance on Dwelling Risks
Earthquake Insurance has a highly public nature, being co-managed by the Government and general insurance companies. The Government reinsurance scheme is essential for the stable operation of the system.
The Government states that the penetration of Earthquake Insurance will be improved through enhanced systems in its Basic Disaster Management Plan. The penetration of the Earthquake Insurance is also supported by the national tax regime which allows income tax deductions for Earthquake Insurance policyholders.
Due to the fact that Japan is prone to earthquakes, we recognize the need to further promote Earthquake Insurance for the stability and protection of people's lives under this public-private partnership.
(3) Addressing environmental issues
We have developed an action plan for environmental protection and conducted various activities such as the Eco and Safe Driving Club, and the promotion of the use of recycled automobile parts. The Earthquake has attracted public attention on effective use of limited resources. We consider it significant to further promote the use of recycled auto parts in repairing damaged vehicles.
We will continue to promote various activities under "the General Insurance Industry Action Plan to Protect the Environment" with the aim of achieving a recycling-based society.
(4) Improving the quality of insurance solicitation
Starting in October 2011, we will begin a new examination system for about two million general insurance solicitors. We will strive to improve the quality of insurance solicitation through the smooth launch and proper operation of the new system, and the enrichment of the curriculum based on lessons learned from the Earthquake.
In October 2010, we established the "General Insurance ADR (Alternative Dispute Resolution) Support Center" to resolve various disputes regarding general insurance in a simplified manner. We will enhance the function of resolving complaints and disputes, while listening sincerely to customers' opinions. We will make further efforts to improve the quality across all business processes, taking into consideration the feedback from "the Advisory Panel to Listen to Consumers' Voices" as well as from the above-mentioned sources.
(5) Traffic accident reduction, disaster and crime prevention, and traffic safety
We are widely publishing information through various media, conducting educational activities for disaster and crime prevention, and submitting proposals for traffic accident reduction. In particular, we will promote the "Exploration for Disaster Prevention" program as a priority. This learn-by-doing program, where children learn disaster and crime prevention, and traffic safety based on real experiences, encourages them to proactively evacuate at the time of a disaster. We will also strengthen the measures for traffic accident reduction and traffic safety for elderly people.
(6) Further enhancing the soundness of the industry
New frameworks on supervision and regulation, as well as international accounting standards are being discussed on a global basis to enhance the soundness and transparency of financial institutions. These frameworks will set a new benchmark to evaluate corporate management. The Japanese general insurance industry is expected to properly respond to such changes.
We aim to further enhance the soundness of our member companies by actively submitting comments to international standard-setters, such as the International Association of Insurance Supervisors (IAIS), and responding to various issues regarding the introduction of regulations, such as economic value-based solvency standards.
Enterprise risk management has been pursued by each member company, however, we will provide support to proactively promote its implementation.
In addition to the above-mentioned issues, we will dedicate ourselves to promoting activities for consumers and school programs, while submitting requests and proposals to the Financial System Council, as well as to the relevant bodies in charge of tax, regulatory, and legal reforms.
This year is the last year of the GIAJ's 5th Mid-term Business Plan. We will work to achieve the targeted measures under the plan. In the meantime, we will duly initiate the process of putting together the 6th Mid-term Business Plan. Additionally, we will prepare for the transition to a general incorporated association, as has been authorized organizationally, in response to the new Government legislation on institutional reform to public interest corporation.
General insurance companies underwrite risks that exist throughout society. Insurance contributes to the social stability and economic development through timely and proper payments of claims in the event of an accident. While risks have become more intense and complex with time, the Earthquake has prompted public awareness of risks in daily life and work. We recognize that expectations for and attention to general insurance is increasing.
It is our mission to deliver protection and safety to customers. As Chairman of the GIAJ, I will take the lead in working towards this goal and will make maximum efforts over the coming year.
We will steadily implement what we can do to bring smiles and vitality back to the people of Japan. We would highly appreciate your continued support and cooperation.