The GIAJ Chairman's Statement (Translation)
(Dec. 15, 2011

 I would like to report progress on our major initiatives since my previous statement published in September and offer my views as follows:

Introduction

 This year, the general insurance industry has been put to the test by the unprecedentedly frequent occurrence of large-scale disasters, such as the earthquake in New Zealand in February, the Great East Japan Earthquake in March, the hurricanes and tornadoes in the United States, the season's 12th and 15th typhoons in Japan (Typhoon Talas and Roke, respectively), the powerful earthquake in Turkey, and the massive floods in Thailand.

 As for the Great East Japan Earthquake, due to our industry's unified post-disaster response, the total amount of claims paid in about 735 thousand cases for Earthquake Insurance on Dwelling Risks (hereinafter Earthquake Insurance) has reached 1.193 trillion JPY, with 98.7% of reported claims having been either settled or investigated, as of December 14.

 The floods in Thailand have caused heavy damage on many dwellings and industrial parks, significantly affecting production activities in the country. Our member companies that underwrite risks in Thailand have been engaged in damage investigation for proper and prompt payment of insurance claims, by swiftly dispatching assistance personnel for a long term.

Mr. Shuzo Sumi, Chairman 
The General Insurance Association of Japan
Mr. Shuzo Sumi, Chairman

 We will continue to make full efforts to respond to each of the disasters so that general insurance can serve the early recovery and reconstruction of the affected areas.

 As the half-year results of our 25 member companies indicate, the business environment for the industry remains very severe, particularly because of the continuing high loss ratio for automobile insurance, the worsening investment performance following the stock market decline, and the occurrence of large-scale disasters in Japan and overseas.

 In view of the economic climate in Japan, the GDP for the third quarter recovered from the sharp drop following the Great East Japan Earthquake. However, there is little room for optimism, as Japan's economic recovery has been held back by various factors such as the worldwide economic slowdown due to the debt crisis in the eurozone, the prolonged appreciation of the yen, and the impact of the floods in Thailand.

1. Response to the Great East Japan Earthquake (roles and functions of the GIAJ)

 The general insurance industry's most important mission in responding to the earthquake has been to ensure proper and prompt payment of Earthquake Insurance claims. It is the GIAJ's role to steadily advance unified industry-wide measures.

 We believe it is crucial for us to sort out issues to be tackled that have been highlighted through our post-disaster response to date. Following that, we need to enhance preparedness for the probable occurrence of large-scale disasters, as well as to promote the market penetration of general insurance including Earthquake Insurance.

(1) For proper and prompt payment of Earthquake Insurance claims

 We will prepare for future emergencies by enabling swifter decision-making and implementation based on what we have realised and learned from our post-disaster response.

 For proper and prompt payment and increased customer satisfaction, we will promote specific measures such as improving granularity of the joint investigation and approval process of "total loss areas" en bloc, and further clarifying methodologies of damage assessment and approval.

(2) For improving the market penetration of Earthquake Insurance

 Since the Great East Japan Earthquake, public awareness of risk has been raised, which in turn has increased the number of our member companies' newly bound Earthquake Insurance contracts by more than 7%, compared with the same period in the previous year.

 We will continue our community-based promotional activities to improve the market penetration of Earthquake Insurance, including ongoing public relations activities and open lectures in cooperation with local municipalities.

(3) For the stable operation of the Earthquake Insurance system

 A working group set up under the Ministry of Finance examined the possibility of abolishing the special account for earthquake reinsurance and transferring the custodian role of the account to a non-government third party. As a result of the discussion, it became evident that many supported the existing system based on the government's special account for its ability to ensure safety and security, which was reported to the Government Revitalization Unit on November 30.

 We also recognise the increasing need for enhanced levels of safety and security under the current system. At the same time, we think it necessary to strengthen the resilience of the system so that customers can apply for Earthquake Insurance confidently. This is particularly relevant in view of potential threats from a series of earthquakes in the Tokai, Tonankai, and Nankai areas as well as an epicentral earthquake in the Tokyo metropolitan area.

 Additionally, it is crucial that we listen carefully to customers' voices, and strike the right balance between the coverage and cost.

 We will continue to take part in discussions with experts to fulfill our social responsibility.

2. Specific measures for other key issues

 The following are our key activities so far and subjects henceforth:

(1) Addressing environmental issues

 We are also holding a promotional campaign for the use of recycled automobile parts in November and December to encourage recycling and raise awareness of its importance. Supported by relevant ministries and agencies and sponsored by interested organisations, we are reaching out to a wide range of drivers through the campaign.

(2) Improving the quality of insurance business administration

 We began a new examination system for general insurance solicitors in October. Since the launch of the system, more than 140 thousand people have applied for the examination. Together with the Insurance Solicitors’ Qualification Information System, the system has been launched smoothly.

 The General Insurance ADR (Alternative Dispute Resolution) Support Center has so far settled 2,380 complaint cases and 293 dispute cases between its launch in October 2010 and September 2011. Compared with figures for the same period the previous year, the number of complaints settled increased by about 1.7 times, and for disputes resolved by almost 4.7 times, following the designation as an ADR organisation. We believe that the increase in the numbers can be attributed to the heightened recognition of the General Insurance ADR Support Center and customers' expectations for the financial ADR system.

 We will strive to smoothly settle complaints and disputes and improve the quality of business processes by responding to user opinions.

(3) Promoting traffic accident reduction, disaster and crime prevention, and traffic safety

a. Theft Prevention Day
 On October 7, we engaged ourselves in awareness-raising activities to prevent auto theft, car break-ins and residential burglary in all 47 prefectures.

 We also started the 11th Automobile Theft Prevention Campaign on November 1 to draw more attention to the issue, as part of the Government-Private Sector Joint Automobile Theft Prevention Project.

b. Exploration for Disaster Prevention
 The Exploration for Disaster Prevention program is for school children to study crime and disaster prevention as well as road safety through hands-on experience. This year's program, which started two months later than usual due to the earthquake, attracted 344 participating schools and organisations, and 1,643 map submissions, rewriting last year's record high numbers of 317 and 1,607, respectively. We can see the heightened awareness for disaster prevention in many of the works which were drawn from a viewpoint of whether their hometowns are really safe.

 We will continue to encourage local activities across Japan and implement awareness-raising activities for disaster prevention and reduction towards a more secure, safer society.

(4) Responding to international standard-setting activities and improving the soundness of the industry

a. G-SIFIs
 Following the G20 Cannes Summit in November, a policy framework for G-SIFIs (Global Systemically Important Financial Institutions) in the banking sector was published as part of ongoing international measures to enhance financial stability.

 In the insurance sector, the IAIS (International Association of Insurance Supervisors) is to complete its assessment methodology for identifying G-SIFIs by the G20 Mexico Summit in June 2012.

 We will closely monitor the developments and actively express our views on the possible impact on the general insurance industry.

b. IAIS 2011 Annual Conference
 On September 30, I had an opportunity to make a presentation on our response to the Great East Japan Earthquake to insurance supervisors and industry representatives from around the world who gathered at the IAIS 2011 Annual Conference in Seoul.

 I reported the unified industry-wide efforts for prompt payment of insurance claims. The presentation also included an explanation of the effectiveness of the Earthquake Insurance system supported by the government reinsurance, which contributed to the limited impact on the financial status of the industry.

 During the visit to Seoul, I also had a meeting with leaders of the General Insurance Association of Korea. We exchanged views on our common challenges, such as issues arising from aging populations, how to reduce traffic accidents, and outlook on expanding business overseas. The meeting reaffirmed the relationship between the two associations.

(5) Financial System Council

 Three working groups (WGs) were established under the Financial System Council for the topics put to consultation in March, and have been engaged in active discussions.

 The WG on regulations related to insurers' group management has been of obvious relevance to the general insurance industry. We recognise that the WG fully understands our situation and the substance of our requests. We are therefore hopeful that discussions will lead towards deregulation where relevant.

 Deregulation would enable an agile overseas business expansion through M&A, and provide more options to restructure operations and streamline management. We will make efforts to improve customer convenience as well as corporate value.

(6) Requests for tax reform in the next fiscal year

 A large package of tax revisions for fiscal 2012 was released on December 10. Although we had requested as a priority issue the elimination of double taxation on dividend income to increase the gross revenue reduction for such income, no change was made to the package from the previous one. We will have another set of discussions on the requests for the 2013 package.

3. Conclusion

 While we have so far focused on the response to the Great East Japan Earthquake as a top priority, we recognise that the reconstruction of the affected areas will take some more time. We are determined to contribute to a more secure, safer society by utilising what we have realised and learned from our post-disaster response and by making full efforts to address various challenges the general insurance industry faces.

 We would highly appreciate your continued support and cooperation.

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