The GIAJ Chairman's Statement (Translation)
（March 21, 2013）
Two years have passed since the Great East Japan Earthquake. I wish to once again extend my deepest condolences to all who were affected by the disaster.
We will never forget the experiences of and lessons learnt from the disaster, and are going back to the basics of general insurance with the reconfirmation that it is an important part of the overall infrastructure which supports the day to day lives of people and the greater economy. To this end, we are determined to make our role more robust, sound, and reliable.
I am now nearly nine months into my tenure as the Chairman of the GIAJ. I would like to report on our recent activities and future challenges.
1. Our activities and future challenges
(1) Measures to make general insurance more robust, sound, and reliable
i. Enhancing public awareness of general insurance
(a) Making sales materials and solicitation practices more consumer-friendly
At the January 30 meeting of the Financial System Council's 'Working Group on Insurance Products and Services', we submitted design examples of sales materials for automobile insurance prepared by our 'Customers Voices and Experts Advisory Council', and explained the challenges of introducing them. Our proposal was generally well-received. Following the results of future discussions with the working group, we will draw up industry-wide guidelines to develop sales materials, and work on design examples of more consumer-friendly sales materials for other products targeting general consumers, such as fire and personal accident insurance.
(b) Improving the level of agents and solicitors ('General Insurance College Course')
As for the 'General Insurance College Course', the GIAJ and the Independent Insurance Agents of Japan Inc. jointly launched a 'Professional Course' last July. The 'Professional Course' has to date accredited a large number of sales staff as 'General Insurance Planners' proficient in insurance related laws and taxes. Starting next month, we will offer a new 'Consulting Course' to develop accredited 'General Insurance Total Planners' with more practical knowledge and business skills. So far about 800 people are scheduled to take the course. In June, we will hold the first examination for the 'Professional Course' in fiscal 2013. Through the framework of the 'General Insurance College Course', we will strive to increase the number of sales staff who can give more appropriate and higher-quality advice to customers.
(c) Enhancing our ADR (Alternative Dispute Resolution) function
The 'General Insurance ADR Center (General Insurance Counseling and ADR Center)', a designated alternative dispute resolution organisation stipulated under the Insurance Business Law, deals with inquiries regarding general insurance, receives complaints from customers in cases where their troubles with insurers have not been resolved, and provides support in dispute resolution by, for example, issuing settlement proposals. Starting April, we will introduce a framework to alert and provide member companies in question with recommendations for improvement in regard to serious troubles received by the center, to further enhance our member companies' response capability to customer complaints. In addition, based on the report issued this month by the Financial Services Agency's 'Experts Council on the Follow-up of the Financial ADR System', we will strengthen our system to listen to consumers' voices with more sincerity and reflect their concerns in our business operations.
ii. Minimising social losses
(a) Preventing troubles associated with home repairs
The number of troubles associated with service providers attracting customers by suggesting the use of insurance has been on the rise. For example, cases have been reported in which high prices were charged following cancellations after customers found providers untrustworthy, contractors encouraged customers to make fraudulent claims despite the absence of damage covered by insurance, and service providers made claims based on customers' contracts with no right to do so. To prevent such troubles, we are widely calling customers' attention to the situation by publishing leaflets showing examples and offering tips on ways to deal with such eventualities. We will enhance countermeasures in collaboration with consumer groups.
<Points to remember>|
- Please confirm with your insurer or agent before entering into a contract with a home repair provider premised on insurance cover.
- Please make sure that you (the insured) make claims on your own.
- Home damage caused by natural disasters such as typhoons and snowfall is covered by fire insurance in most cases, while damage caused by wear and tear, deterioration, and rust is not.
- Please call our 'Insurance Fraud Hot-line' (0120-271-824) when you are contacted by suspicious contractors.
(b) Strengthening insurance fraud and fraudulent claims prevention
In January, we launched the 'Insurance Fraud Prevention Office'. Its 'Insurance Fraud Hot-line' receives various kinds of information and helps our member companies enhance their preventive efforts. For example, reported cases include an attempt to make a claim for a staged accident, unnecessary hospital visits following treatment and cure of a cervical sprain, fraudulent claims by a bonesetter, and an attempt to make a claim for non-existent damage to belongings such as a bag. The office collects relevant data from our member companies and is considering the introduction of an analysis system.
In addition, strengthened cooperation with relevant authorities such as the police is of importance in preventing insurance fraud and fraudulent claims. We will make further efforts in this regard, including more active use of the existing cooperative framework for general insurance crime prevention.
In February, the GIAJ had a working-level meeting with the Hong Kong Federation of Insurers (HKFI) to exchange information on the status and prevention of insurance fraud. With strong awareness of the problems we have in common, we will continue to exchange information and views on related issues, including how to cooperate with the police.
(c) Preventing automobile theft
The GIAJ is conducting a fact-finding survey on automobile theft, covering cases that resulted in insurance claim payments. The results of a survey on cases last November show that the number of theft cases for some vehicle types, which had been prone to theft, dropped greatly thanks to the installation of immobilisers (a security device) as a standard feature. Meanwhile, the number of thefts of heavy-duty trucks is on the rise. The measures developed by the 'Government-Private Sector Joint Automobile Theft Prevention Project Team', such as encouraging cars with enhanced theft prevention functions and calling drivers' attention to crime prevention, have begun to bear fruit, though we find it necessary to further advance such efforts.
On the other hand, in theft-prone areas, ordinances banning the possession of devices often used for theft are being considered. In addition to our awareness-raising efforts, we will exchange information with relevant parties based on discussions at the 'Customers Voices and Experts Advisory Council', and provide assistance to their theft prevention activities.
(2) Measures to make general insurance companies and businesses more robust, sound, and reliable
i. Strengthening the soundness of the general insurance system and general insurers
(a) Making the Residential Earthquake Insurance system more resilient (the fiscal 2013 government budget)
The Ministry of Finance's 'Residential Earthquake Insurance (REI) Project Team' published a report last November, which identifies raising the REI system’s resilience as a key factor going forward in preparation for a series of large-scale earthquakes. Accordingly, a review of burden sharing between the government and the industry has been factored into the fiscal 2013 budget. We appreciate this as an appropriate response in order to ensure proper payment of claims and raise the level of the public’s overall sense of security in the system. We are determined to promote REI, which has the aim of helping those affected by earthquakes to get back on their feet as soon as possible.
(b) Tax reform for fiscal 2013 (Broadening the pre-event catastrophe loss reserve system)
In the package of tax revisions for fiscal 2013, the existing pre-event catastrophe reserve system concerning fire insurance will be broadened in line with our petitions, with the current four percent accumulation rate raised to five percent for the next three years. The recent payouts of numerous catastrophe losses have resulted in a significant reduction in the amount of insurers' catastrophe reserves. We will work hard to restore it swiftly to ensure the sustainable viability of the cover we provide to customers.
(c) Reviewing the GIAJ's BCP (Business Continuity Plan)
Preparing for major earthquakes, we undertook a thorough review of our BCP. We identified priorities and created a procedural manual to maintain high-priority functions in alternate locations in times of disaster, so that we can provide support to our member companies' post-disaster activities, such as proper and prompt payments and special measures including an extension of the grace period regarding premium payments. We will continuously review our BCP through conducting drills and at the same time enhance our preparedness according to the plan to ensure our industry's expected role in times of disaster.
(d) Framework for orderly resolution of financial firms
The Financial System Council’s 'Working Group on Banking Regulation that Contributes to Financial Stability' has compiled a report, which will lead to establishing a framework for orderly resolution of all financial firms, including banks, security brokering firms, and insurers, in the event of a crisis with financial market contagion. While keeping in mind the goals of the initiative, we will seek to ensure that any discussion on the design of the framework takes account of and is reflective of the unique characteristics of individual sectors including general insurance. We will also go ahead with preparations to deal with the new framework.
ii. Diversifying our business to better meet customer needs
(a) Voicing our opinions on regulations in other jurisdictions
With regard to the U.S. reinsurance collateral requirements, we submitted to the National Association of Insurance Commissioners (NAIC) our comments on the proposed 'NAIC Process for Developing and Maintaining the List of Qualified Jurisdictions'. In this submission, we call for non-discriminatory rules, pointing out that, for example, an evaluation process for individual reinsurers should be made short and simple once their home jurisdiction is qualified, and negative consequences on reinsurers which to some extent have already met regulatory requirements in the United States should be prevented.
We also signed a joint statement calling for a reform of Brazil's reinsurance regulations. The statement, singed by seven insurance trade organisations, welcomes the International Monetary Fund (IMF)-World Bank assessment report which states the country's reinsurance regulations are protectionist measures and hinder market access, economic growth, and the healthy spread of risk.
(b) Collaboration with overseas institutions
We are always looking into ways to better promote and support the development of sound general insurance markets globally, and to assist our members companies’ operations abroad. In February, I hosted a meeting with a group of financial officials from Myanmar led by Dr. Maung Maung Thein, Deputy Minister of Finance and Revenue, the ministry in charge of insurance supervision. We exchanged views on the Japanese general insurance industry and changes in the roles of insurance associations following liberalisation and deregulation. Myanmar has seen rapid progress in democratisation. In April 2012, the government announced a plan to allow the establishment of privately-owned insurance companies. During our meeting, the Deputy Minister showed willingness to learn from the Japanese general insurance industry's experiences, with an eye on how the industry should be supervised and regulated to avoid confusion in the market and ensure its sound development, after the opening of the market currently monopolised by the state-owned enterprise.
In March, the GIAJ, the General Insurance Rating Organization of Japan, and the Non-Life Insurance Institute of Japan received a visit from Indonesia's financial services authority, the Otoritas Jasa Keuangan (OJK). We exchanged ideas for the establishment of a rating organisation in Indonesia.
For the further betterment and development of the insurance industry, we will continue to work on our international activities.
(c) Promotional activities for Compulsory Automobile Liability Insurance
We have begun our fiscal 2012 public information activities on Compulsory Automobile Liability Insurance (CALI), in which Haru (an actress) appears with a catch phrase 'Please don't forget CALI'. In particular, we are conducting promotional activities intensely this month. Having a CALI policy is compulsory for both registered vehicles, which are subject to safety inspection, and motorbikes, which are not. As a result of our public information measures, the number of accidents caused by vehicles without a CALI policy has dropped by 20 percent over the past five years. As we did in the past, this year we are concentrating our efforts on gaining public understanding of CALI's key features: 'compulsory' and 'designed to assist traffic accident victims'. In addition, we will hold a campaign in which quiz questions are given to attract more interest.
We will also support various activities to provide relief to victims of car accidents as well as prevention measures, by utilising profits from managing CALI premiums.
2. In closing
As an important element of society, we, the general insurance industry, are making efforts to protect and conserve the global environment. Following our decision to join Keidanren's 'Commitment to a Low Carbon Society' in April 2010, we finally agreed on and published our action goals to achieve greenhouse gas reductions by 2020 at our board meeting today. Toward the achievement of these, our member companies will also enhance their environmental efforts.
I have nearly three months to go before the end of my tenure as the GIAJ Chairman. I remain committed to delivering on my promises to make the general insurance system, general insurers, and the industry more robust, sound, and reliable, under our Sixth Mid-Term Business Plan. Your continued support and cooperation are greatly appreciated.