Upon taking up the post of Chairman of the General Insurance Association of Japan (GIAJ)
（June 28, 2013）
As the newly appointed Chairman of the GIAJ, I would like to express my opinions as follows:
1. Situation in the general insurance industry
The incipient recovery of the global economy has led to various measures being spelled out under the Japanese government's so-called “three-arrow” economic strategy, consisting of monetary policy, fiscal policy, and growth strategies. As a result, Japan’s economy is now in a situation where there are positive signs of an economic upturn such as a correction to the strong yen and rising stock prices.
Also in the accounts settlement for fiscal 2012 of the general insurance industry, a number of companies returned to profit or showed earnings growth thanks to a reduction in claims related to natural disasters both at home and abroad, and an improvement in investment income. However, while some signs of improvement in its profitability were seen, the loss ratio of automobile insurance, which is a mainstay product, remained on the high side.
Since general insurance companies’ business performance is closely linked to economic trends, brisk corporate activities and an increase in consumer spending are positive factors that bring about growth in premium income. Looking from a mid- to long-term standpoint, however, we see that the situation surrounding the domestic general insurance market may remain tough due to the rapidly aging population and the falling birthrate, which will lead to a depopulating society.
In order for the general insurance business to attain sustainable development and grow in a sound manner amid such an environment, we realize it is necessary to correctly perceive changes in society and the needs of the customers and carry out measures for the future in a steady fashion.
2. Our strategic direction
(1) In light of the missions of general insurance
Immediately after the devastating Great East Japan Earthquake, we made industry-wide efforts to pay insurance claims to those affected by the catastrophe without wasting even a day and consequently paid earthquake insurance claims of more than 1.2 trillion yen. In our country, which is prone to earthquakes, the earthquake insurance system is important in that it helps those affected to get back on their feet as soon as possible. Since the earthquake, the general insurance industry in unison with the Japanese government has been carrying out studies for making the system more resilient and easy-to-understand. The household purchase rate of earthquake insurance has been increasing year by year, yet remained at less than 30% as of the end of fiscal 2012. We will therefore work on further improving the market penetration of earthquake insurance.
Damage caused by accidents, disasters such as earthquakes, and crimes, can be averted or mitigated to a certain extent by daily awareness of individuals and companies and the implementation of precautionary measures. As with providing better general insurance products and services and promoting their penetration, it is our industry’s important mission to plow ahead with measures for disaster prevention, crime prevention, and traffic safety, in order to help build a safer society.
The GIAJ’s Sixth Mid-Term Business Plan, which runs from fiscal 2012 through fiscal 2014, fosters a strong awareness of these missions and sets “reduction in social losses” as its big challenge.
(2) Uncompromised implementation of the Sixth Mid-Term Business Plan
The GIAJ is promoting measures for resolving each challenge under the Sixth Mid-Term Business Plan. This fiscal year is important in speeding up each measure with an eye on the goal of fiscal 2014. Therefore, we will shore up and promote the following three measures, positioning them as high priorities:
i. Reduction in social losses
Since it is our industry’s mission to reduce social losses due to accidents, disasters, and crimes, we will bolster and promote measures to help raise awareness of disaster prevention, crime prevention, and traffic safety, which will lead to loss reductions.
ii. Pursuit of "comprehensibility" of general insurance products and a "greater sense of security" for customers
To build/maintain good relationships between customers and general insurance companies throughout an insurance period as well as at the time of insurance solicitation, it is crucial to provide continuously improved general insurance products and services, and ensure that customers accurately comprehend the content of products and services by offering clear explanations. Therefore, we will bolster and promote measures to pursue “comprehensibility” of general insurance products and a “greater sense of security” for customers.
iii. Improvement in the general insurance business environment
With the aim of sustainable development and sound growth of the general insurance business, we will bolster and promote measures that help improve the business environment surrounding it, such as by responding to systems and regulations at home and abroad.
3. Specific measures
(1) Reduction in social losses due to accidents, disasters, and crimes to build a safer society
i. With the Great East Japan Earthquake as the turning point, there has been a rise in the public's awareness of and attention to accidents, disasters, and crimes. To have this lead to the establishment of specific measures and preparedness by individuals, we will dispatch information on our disaster prevention, crime prevention, and traffic safety know-how, taking advantage of various occasions and the media.
This year we will hold our tenth annual “Exploration for Disaster Prevention” event where schoolchildren, who will lead the next generation, learn about disaster prevention, crime prevention, and traffic safety, while exploring the town where they live through their real experiences. The total number of participants in the event has surpassed 80,000 so far and is expected to reach 100,000 this year. We will again widely promote the event this year so that it raises safety awareness among children and leads to their specific evacuation activities in the event of a disaster.
In addition, we will help people better understand precautions against risks in their daily lives, such as safety measures on bicycles and strategies for reducing accidents involving senior drivers.
ii. Under the Sixth Mid-Term Business Plan, we have been bolstering and promoting measures to prevent misuse of the insurance system, such as insurance fraud and fraudulent claims. In January 2013, we established a division within the GIAJ specializing in dealing with and preventing insurance fraud, and have been expanding an industry-wide database while pursuing a study on advanced cases overseas. This year, we will enhance the industry-wide database regarding insurance fraud and fraudulent claims, and deepen a study on the method of its use, while widely dispatching information and calling for attention to be paid to specific cases and troubles.
(2) Improving comprehensibility and instilling a greater sense of security for worry-free general insurance
i. To ensure that customers understand general insurance accurately, the GIAJ and its member companies have made concerted efforts to study how solicitation materials and sales explanations can be more consumer-friendly. Based on these studies, we have decided to revise the “Guidelines for Policy Overview and Warning Information” and the “Guidelines for Description of Solicitation Materials, etc.” The solicitation materials that customers look at when concluding a general insurance contract will be changed in line with these Guidelines.
Additionally, with regard to administrative procedures on insurance solicitation, we will go ahead with studying ways to standardize procedures and formulate guidelines as far as possible.
ii. In order to help general insurance solicitors acquire further knowledge and business skills, in July 2012, the GIAJ, together with the Independent Insurance Agents of Japan, Inc., introduced an accreditation system called the "General Insurance College Course". So far, approximately 38,000 sales staff members have been accredited as "General Insurance Planners".
To increase customers’ confidence in general insurance, we will plow ahead with measures for enhancing general insurance solicitors’ knowledge and skills.
iii. Based on consultations and complaints received by the "General Insurance ADR Center (General Insurance Counseling and ADR Center)" and opinions shared at the "Customers Voices and Experts Advisory Council" where challenges and other topics regarding the general insurance industry are widely discussed, we will continue to make efforts to enhance the quality of the general insurance business.
(3) Future measures for the industry’s sustainable development and sound growth
i. The GIAJ has actively voiced its views and requests regarding systems and regulations that may affect our country’s general insurance business and general insurance companies, so that the industry may continue to help build a worry-free and safe society.
Specifically, we have taken the following measures and will make active efforts, including requests for tax and regulatory reform.
(a) Response to a review of how insurance products and services should be provided to customers
The Financial System Council’s “Working Group on Insurance Products and Services” published its reports recently. Among them it made recommendations in the direction of easing regulations on insurance products and services and simultaneously suggested a broad review of regulations on the rules of insurance solicitation and sales. Both these will help the insurance business achieve sustainable development and sound growth. We realize that the latter in particular will lead to the establishment of a foundation for “comprehensibility" of general insurance products and a "greater sense of security" for customers. When studies on developing the systems are carried out by competent authorities, the general insurance industry will continue to make requests and recommendations so that appropriate reviews on the systems may be realized based on business practices.
(b) Response to orderly resolution of financial firms
The revised Financial Instrument and Exchange Act and related laws were enacted in this ordinary session of the Diet. This revision will establish a system for the orderly resolution of all financial institutions including insurance companies in the event of a crisis with a financial market contagion. While keeping in mind the purpose and goals of the system toward its enforcement, we will request consideration of the detailed rules based on the unique characteristics of individual sectors while moving ahead with preparations to make an appropriate response thereto as the insurance industry.
(c) Response to international trends
Discussions on systems and regulations on financial firms including general insurance companies have been advanced abroad as well, such as stabilization of the financial system, ensuring its soundness, and construction of new regulatory framework on Internationally Active Insurance Groups (IAIGs). We have been actively voicing our views on the studies at international organizations including the International Association of Insurance Supervisors (IAIS). We have also been actively voicing our views and requests on overseas regulations and trade barriers that may affect our country.
ii. Some emerging countries are at the developmental stage in the field of general insurance and therefore their infrastructure for sound and stable growth has not yet been fully put in place. The GIAJ has been forging ahead with measures for sustainable development and sound growth of the general insurance business in emerging countries including Asian nations. We join hands with the General Insurance Rating Organization of Japan and the Non-Life Insurance Institute of Japan to provide know-how on soft infrastructure including the insurance rating system, which our general insurance industry has taken a long while to cultivate.
For instance, we have provided technical support to countries including Indonesia that are keen to expand their insurance rating system, and will shore up such measures further down the road.
The Insurance School of Japan (ISJ), which is an insurance technical cooperation program aimed at promoting mutual understanding and stepped-up exchanges between general insurance industries in the Asian region, marks its 41st year this year. To contribute to sustainable development of the general insurance business in the region, we will continue to provide technical support.
The risks faced by individuals and companies have become sophisticated and complicated because of changes in society and the environment. We believe that general insurance companies will be able to help build a worry-free and safe society by precisely grasping such risks, carrying out measures to help reduce risks, and providing better insurance products and services, and thus we think we will be able to contribute to the development of Japan’s economy as well.
In order for the GIAJ and our member companies to fulfill our missions in a steady manner, I will take the lead in making good-faith efforts for this one-year tenure of office as the Chairman of the GIAJ.
Your support and cooperation would be greatly appreciated.