The GIAJ Chairman's Statement (Translation)
（Sep. 15, 2011）
I would like to report progress on our major initiatives and offer my views as follows:
1. Unified post-disaster responses of the industry
The Earthquake Insurance on Dwelling Risks (hereinafter Earthquake Insurance) demonstrated its objective "to contribute to the stabilization of the lives of the affected people".
The general insurance industry has made collective efforts to expedite claim handling, and the total amount of claims paid for Earthquake Insurance reached 1 trillion yen around three months after the occurrence of the Earthquake. The cooperation between, and the measures adopted by insurers, agencies and the government have proven effective in responding to policyholders’urgent needs.
(1) Measures for proper and prompt payments of Earthquake Insurance claims
Our member companies have made utmost efforts to enhance proper and prompt payments of reported claims, and have also encouraged affected beneficiaries to report insurance claims to their agencies.
The total amount of Earthquake Insurance payouts has reached 1.145 trillion JPY. So far, 97.8% of reported claims have been either settled or investigated. (as of September 14, for Dwelling Risks)
The estimated ultimate payout for the event stands at 1.2 trillion JPY, as we continue to receive about 800 claim reports per day.
We will continue proper and prompt Earthquake Insurance payment by ushering policyholders to review if any covered claim has been identified at times of policy renewal or issuance of tax credit certificates.
(2) Improving the market penetration of Earthquake Insurance
This is one of the social missions of the general insurance industry along with prompt and proper insurance payment. Following the disaster, the number of newly bound Earthquake Insurance contracts increased by 10% through April and May, compared with the previous year. We will continue promoting various measures for further improving the market penetration of Earthquake Insurance.
a. "Earthquake Insurance publicity campaign"
We will implement various public relations measures to inform people how Earthquake Insurance functions, and how to apply for coverage through newspaper advertisements, television, radio and other media.
b. Reaching out to local governments
As we discussed earlier, the total amount of Earthquake Insurance on Dwelling Risks payment has exceeded 1 trillion JPY for this disaster. By prefecture, the amount paid in Miyagi has been the highest, with around 530 billion JPY.
This is due to the prefecture's relatively high penetration ratio of 33.6% (national average is 23.7% calculated by the Non-Life Insurance Rating Organization of Japan), which represents the number of earthquake insurance policies divided by households. This high ratio is considered in part as a result of cooperation between the Miyagi prefectural government and the general insurance industry. Miyagi prefecture's disaster prevention plan explicitly mentioned earthquake insurance as a viable option for post-disaster household recovery method, which might have raised public interest in Earthquake Insurance.
Viewing the increasing interest in the local governments to embed Earthquake Insurance in their disaster prevention plan, we will actively encourage relevant authorities accordingly.
(3) For the stable operation of the Earthquake Insurance system
It is necessary, while promoting and improving the market penetration of Earthquake Insurance, to design and operate sustainable and stable system now that insurance reserves which had been accumulated by insurers in the past time, significantly decreased due to payouts following the last earthquake.
These themes have been discussed by the conference of "Earthquake Reinsurance Special Accounting Organizing Issues Working Group", and the data regarding payments and contracts of Earthquake Insurance are submitted by the general insurance industry to substantiate the discussion. Also, in terms of product design, we gathered the voice of customers' regarding their opinions on the "degree of damage", "amount payable" and "damage criteria" in loss adjustment.
We are going to widely share information in order to continue open discussions to improve practices for solicitation and claim handling of Earthquake Insurance.
(4) Accomplishing our mission during the disaster
"Efficient claim assessment utilizing aerial and satellite photography" and the "Earthquake Insurance account query system" were put in practice based on the lessons learned from the Great Hanshin Earthquake. The past experience and records were useful and enabled quick judgement and execution of effective measures in such an unprecedented disaster.
About six months have passed since the occurrence of the Great East Japan Earthquake, and we strongly recognize that it is indispensable for the general insurance industry to make the most of the experiences from the event by reviewing and enhancing organizational procedures to provide security and safety, while meeting public expectations.
2. Specific measures and actions for key subjects
The followings are our key activities so far and subjects henceforth.
(1) Addressing environmental issues
We have developed an action plan for environmental protection and conducted various activities such as " the promotion of the use of recycled automobile parts ", and " the Eco and Safe Driving Club". We newly established a "project team to promote the use of recycled automobile parts" on Aug 1 in order to further enhance the activities related to environmental protection.
We would like this project team, as well as our member companies, to cooperate and work well together in promoting activities for automobile users and repair shops.
(2) Improving the quality of insurance business administration
Starting in October 2011, we will finally begin a new examination system called the "General Examination for General Insurance Solicitors", which integrated "the Examination for General Insurance Solicitors" and the "General Insurance Education System". We have developed and started operating "the Insurance Solicitors Qualification Information System" since September, which shares information among the general insurance industry and consolidates information on the solicitors' qualification status simultaneously at the start of the new examination.
We will strive to improve the quality of insurance solicitation through the smooth operation of the new examination and the common system among the general insurance industry.
Additionally, a year has passed since we established the "General Insurance ADR Support Center". The number of reported complaints has reached 2,206 (1.5 times higher, compared with before its establishment), and the number of reported disputes has reached 264 (4 times more) as of August 31.
We will continue to improve the quality of insurance business administration as well as to fulfill a role in the form of a resolution scheme for complaints and disputes from customers.
(3) Traffic accident reduction, disaster and crime prevention, and traffic safety
The GIAJ has published "Promoting road safety for senior drivers" as an educational tool to prevent senior drivers from getting involved in traffic accidents. We will keep ourselves involved in such awareness-raising activities.
The GIAJ has introduced the "Exploration for Disaster Prevention" program for school children to study crime and disaster prevention as well as road safety. The start of this program was delayed because of the disaster, but the GIAJ has been accepting applications since June in response to the growing interest in disaster prevention and safety education across Japan.
Up to this date, about 7,900 works completed by the program participants have been received, and many of them have been taken from the large scale disasters in the past or preventive measures to guard themselves from large earthquakes in the future. Also, we hear that students and parents in Miyagi and Ibaraki prefectures are trying to pass on information about the Great East Japan Earthquake as living lessons to the next generation, and promoting the creation of disaster prevention map as a part of their local project to enhance resiliency. The application deadline is set for November, and we will encourage local activities across Japan towards it.
Additionally, the GIAJ defines October 7 as the "anti-theft day," and we are going to implement awareness-raising activities to prevent crimes, auto theft, car break-ins and residential burglary in all 47 prefectures. This year again, we are going to attract the attention of a broad audience from all over the country.
(4) Further enhancing the soundness of the industry
New frameworks on supervision and regulation for financial institutions are being discussed internationally. The GIAJ considers it critical to establish reasonable framework reflecting the characteristics of insurance business, which should effectively motivate insurers to propel sound business activities through better recognition and management of risks they are exposed to.
From this standpoint, the GIAJ is actively expressing its positions on the "Common Framework for the Supervision of Internationally Active Insurance Groups"(ComFrame), which is developed by the International Association of Insurance Supervisors(IAIS), and other significant issues.
In August, European Insurance and Occupational Pensions Authority(EIOPA) released a report which stated that EIOPA found Japan's reinsurance regulation largely equivalent with that of Solvency II which is under development in Europe. The GIAJ has been expressing its views on the soundness of the Japanese general insurance industry and other measures on risk management in the process of equivalence assessment.
The GIAJ has been granted an opportunity to give a presentation about the Great East Japan Earthquake to international supervisors and other general insurance industry representatives on September 30, during the 2011 Annual Conference of the IAIS in Seoul. As Chairman of the GIAJ, the presentation will focus on post-disaster responses of the industry, the effectiveness of the Earthquake Insurance, and the consequences on the industry's financial soundness.
(5) Financial System Council
The "Regulation related to insurers group management working group" was established on June 29. Conferences were held three times up until August. Revenue opportunities through M&A and restructuring, streamlining or enhancing services through group-wide reorganization were the topics discussed.
Every theme is very significant for the general insurance industry, and we are making efforts to review a part of existing domestic insurance regulations.
(6) Calling for tax reform in the next fiscal year
At the board meeting on July 21, the request for tax reform in the next fiscal year was put together, and was later submitted to the Financial Services Agency and other relevant ministries. As a priority issue carried on from the last fiscal year, we have requested the "elimination of double taxation on dividend income". This request calls for increasing the gross revenue reduction for dividend income to 100% from the current 50%.
Based on the fact that double taxation on dividend income is eliminated in many other countries, the current tax treatment should be reviewed in order to strengthen and not sacrifice the competitiveness of the Japanese financial and capital markets compared with foreign players.
Over the past two and a half months, the GIAJ and its member companies have been implementing various measures for disaster relief as a priority issue. We are resolved to contribute further to building a safer and more secure society.
We would highly appreciate your continued support and understanding to our activities.