The GIAJ Chairman's Statement (Translation)
（Sep. 20, 2012）
I would like to report on our activities and related events since my last press conference in June.
2. Progress on our major initiatives
(1) Measures to make general insurance more robust, sound and reliable
i. Enhancing public awareness of general insurance
The following are some examples of our work to date since July.
(a) Measures on harmonization and standardization
We established a Project Team (the 'Harmonization and Standardization PT') in the GIAJ to look into better ways of harmonizing application procedures and forms. After consulting and receiving a vast number of proposals from our member companies, we have carefully selected 123 recommendations that are likely to benefit customers the most if achieved, including harmonized claim submission forms and standardized questions on an application. We will be going through the recommendations in turn and start implementing new measures shortly.
(b) Customer's Voices and Experts Advisory Council
We have newly established a new 'Customer's Voices and Experts Advisory Council' to replace the existing 'Advisory Panel to listen to Consumers Voices'. Under the Council, two new Task Forces (made up of experts and specialists) will discuss in depth two of the main initiatives laid out in our Sixth Mid-Term Business Plan, namely 'Considering better ways to make sales material and solicitation practices more consumer-friendly' and 'Considering measures on tackling insurance fraud and fraudulent claims'. The former Task Force will consist of lawyers and consumer organization representatives who will look into optimal designs for sales materials and pamphlets so that policies can be easily explained and understood, identify legislative changes required to achieve this (if any), and consider guidelines for member companies on how to improve sales materials.
(c) Launch of a new accreditation system: 'General Insurance College Course'
This July, with the aim of allowing agents and solicitors to deepen their knowledge of laws, taxes and other areas associated with insurance, we jointly introduced a new accreditation system, the 'General Insurance College Course', with the Independent Insurance Agents of Japan, Inc. Starting next year, we also plan to offer a 'Consulting Course' at the college to improve the way front-line sales staff deals with customers.
(ii) Minimizing social losses (Prevention of Insurance Fraud and Fraudulent Claims)
Although the number of traffic accidents and deaths are in decline, the level of motor insurance claims remains high. This also goes for payments due to natural disasters. Accidents and disasters cause pain and suffering to our customers and impose a significant financial burden on both the individual involved and, through the mechanisms of insurance, society as a whole. In the interest of public safety, the GIAJ remains adamant that the number and cost of social losses due to accidents and disasters must be minimized. Recognizing this issue as one of our top priorities, we are working on carrying out the following:
(a) Reducing traffic accidents while focusing on the economic losses and financial burdens (Assessing accidents using our motor claims database)
Traffic accidents impact both victim and defendant psychologically and economically. We have looked into the details of traffic accidents using our motor claims database. Below are some of our findings.
1. Economic losses due to traffic accidents have reached 3.2 trillion Yen (annually) and are showing no signs of diminishing. To rectify this trend, we need measures aimed at reducing accidents resulting in permanent disabilities, as well as those to prevent self-inflicted accidents (e.g. crashing into roadside barriers, etc).
2. Many accidents result in neck or abdominal injuries (which tend to have serious and/or long lasting consequences). It is crucial to raise awareness of the necessity for all passengers (regardless of where they are seated in the vehicle) to wear seatbelts at all times. This reduces the risk of such injuries and other bodily harm caused by being thrown out of the vehicle in the event of an impact.
3. The percentage of elderly drivers is on the rise. As we look ahead to an increasingly aging society, we can help reduce casualties by better assisting elderly drivers in offering more effective traffic safety advice.
4. Though self-inflicted accidents are on the rise for all age groups, they are more prevalent among elderly drivers. We need more effective ways to tackle this issue.
Taking account of these findings, we have published an awareness-raising leaflet on the necessity for everyone to fasten seatbelts regardless of where they are seated in the vehicle. We are also promoting and distributing our recent publication entitled 'Senior Drivers Guide on Traffic Safety'. We have also posted on our website the latest 'Hazard Map: Dangerous crossroads' listing each prefecture's five most perilous crossroads in terms of number of accidents. The map also includes an analysis on the features of each crossroads and the types of accidents that occur there.
(b) The Tenth 'Theft Prevention Day'
This is the tenth anniversary of the GIAJ's ongoing efforts to tackle theft and promote Theft Prevention Day (which was launched back in 2003). The number of known vehicle thefts had been in decline for some time, but 2011 saw an increase in theft for the first time in eight years. We have also seen a rise in the number of navigation-system thefts, etc. In light of such developments, we will be hosting various awareness-raising events in all 47 prefectures on 5 October - this year's “Theft Prevention Day." In particular, we will be handing out various promotional goods and a 'Crime prevention checklist' at train stations, etc.
(c) Insurance fraud and fraudulent claims prevention
We will continue to enhance our efforts on fighting insurance fraud and fraudulent claims. I had an opportunity to visit London this July where I visited the ABI (Association of British Insurers) and other associated organizations fighting insurance fraud. It was helpful to hear about and learn from their experiences. Taking account of the key points of these meetings, we will first undertake a survey on the level of the general public's ethics and morals in September. We will also initiate an industry-wide data collection exercise in October to better identify the amount of insurance fraud and fraudulent claims in general insurance. As mentioned above, we have also set up a Task Force under the new 'Customer's Voices and Experts Advisory Council' that will look into new and improved ways to tackle fraud. We are also considering setting up a new Department in the GIAJ specializing in dealing with insurance fraud and also a special 'cheat-line' where people can report suspected fraud.
(d) Promoting the use of recycled parts for vehicle repairs
In June this year, we set up a Working Group with private organizations and relevant authorities to discuss ways to promote the use of recycled parts for vehicle repairs. We plan to launch a two month promotion campaign in October. This is an initiative that not only keeps the overall social costs for vehicle repairs down but also is kinder to the environment.
(2) Measures to make general insurance companies and businesses more robust, sound and reliable
(i) Strengthening the soundness of general insurers
With the aim of enhancing the financial strength of insurers and ensuring the sustainability of the general insurance business, we will continue to make progress on the following:
(a) Tax reform petitions for fiscal 2013 (Broadening the pre-event catastrophe loss reserve system)
We are currently publicizing and promoting our petitioning efforts on tax reforms for fiscal 2013. General insurers set aside reserves to ensure all claims can be properly paid even in the event of a major natural catastrophe. We are currently asking for the existing pre-event catastrophe reserve system (particularly for fire insurance) to be broadened.
The recent payouts of numerous catastrophe losses have resulted in a significant reduction in the amount of insurers' pre-event catastrophe reserves. We believe the importance of allowing insurers to save for a rainy day, i.e. allowing them to back their sustainability by the swift restoration of these reserves, is something that would appeal to and be understood by the wider public.
We will continue to work hard on getting our tax reform requests accepted, particularly this very important one.
(b) Voicing our opinions on international regulatory issues
We have presented our views and submitted proposals on various important regulatory issues being discussed by international standard setting bodies.
Regarding the IAIS's ComFrame (Common Framework for the Supervision of Internationally Active Insurance Groups) paper that was put out for consultation, we asked for a more globally consistent solvency requirement and also a group-wide supervision framework that was more reflective of how groups actually operate.
As for the identification methodology for G-SIIs (Global Systemically Important Insurers), we requested a methodology that takes better account of the features and characteristics of insurers.
We will continue to follow these issues closely and make sure that the general insurance industry's interests are properly represented.
(ii) Diversifying our business to better meet customer needs
We are seeing changes in customer needs and distribution channels in accordance with social and economic changes (e.g. a rapidly aging and shrinking population). Taking into account such changes, we will work on creating a business environment where we can better meet the diversifying needs of our customers.
(a) Financial System Council's Working Group on Insurance Products and Services
Since this June, the Financial System Council's Working Group on Insurance Products and Services has been looking into what kind of products and services best serve our society and how they should be distributed. Over the course of three meetings, we have petitioned for the easing of conditions to engage in the concerted activities necessary to provide coverage for new types of risk unknown to insurers, and for allowing insurers to offer a broader range of insurance associated services (such as trust services regarding the handling of paid out insurance claims, disaster prevention consulting services, etc.). These issues are being debated thoroughly and we look forward to further opportunities to make the case for our requests.
(b) The promotion of Residential Earthquake Insurance
On 25 August, we launched a national promotion campaign for Residential Earthquake Insurance (REI). REI is a legislated private and public sector risk sharing scheme that aims to provide financial means to those affected by earthquakes to get back on their feet as soon as possible. It plays a significant and crucial role. The total amount of REI claims paid for the Great East Japan Earthquake reached 1.2 trillion Yen, a symbolic achievement that underscores the value and spirit of people helping each other in times of trouble.
We are also running adverts using various media outlets. Using an animated mascot character voiced by Ms. Tomoko Nakajima (a well-known actress), we are raising public awareness of REI and how to take out a policy. We hope to further raise the level of REI penetration nationwide.
3. In closing
During the past three months as the Chairman of the GIAJ, I have pushed forward these and other initiatives.
In addition to our ongoing work with domestic partners and associated organizations, we are also collaborating with overseas institutions to look at ways of further promoting the value of general insurance (and general insurance associations) and the role it plays. This July, we had discussions with the General Insurance Association of Korea on ways to support an aging and shrinking population. In August, we received a delegation from the insurance supervisory authority of Viet Nam (the Ministry of Finance) and exchanged views on deregulation and the training of insurance sales staff. We will continue to enhance our efforts on the international front with the perspective of contributing to the further betterment and development of the insurance industry.
I remain committed to delivering on my promises to make our industry more robust, sound and reliable. Your continued support and cooperation are greatly appreciated.