The GIAJ Chairman's Statement (Translation)
（Dec. 19, 2013）
It has been around six months since I was appointed Chairman of the GIAJ and I would like to report on our activities and related events since.
1. Measures to remove anti-social forces
In consideration of the public nature of the general insurance business, we have been taking measures to sever ties with anti-social forces. In order to enhance such measures, we decided at our board meeting on November 21 to revise our basic policy on the general insurance industry's responses to anti-social forces, and confirmed that member companies would implement the three principles below.
The board also confirmed that each member company will be sure to have a system where transactions with anti-social forces are reported to the management in a prompt and appropriate manner.
<1> In engaging in transactions via its business partners, each member company will take all necessary measures, including verification of the affiliated companies' measures to prevent transactions with anti-social forces.
<3> In order to sever such ties, the GIAJ and its member companies recognize the importance of information gathering on anti-social forces and will work on the enrichment of such information.
Furthermore, in order to supplement and upgrade the content of the GIAJ's database on anti-social forces, we are studying ways to receive data from the Japanese Bankers Association and the Life Insurance Association of Japan. We are also examining the feasibility of offering our data to other organizations subject to appropriate handling.
2. Implementation of the Sixth Mid-Term Business Plan
(1) Reduction in social losses due to accidents, disasters and crimes to build a safer society
i. Prevention of insurance fraud and fraudulent claims
Since launching the 'Insurance Fraud Prevention Office' ('Office') in January 2013, we have been strengthening measures to prevent misuse of the insurance system, including insurance fraud and fraudulent claims.
Currently, the Office is examining the effectiveness of advanced approaches to insurance fraud prevention in foreign countries that may be implemented in Japan. With the cooperation of our member companies, the number of cases added to the industry-wide database on fraudulent and false claims has been growing.
Whilst our member companies are increasingly utilizing the content of the database, we will study effective measures to further promote its use, including a review of the system.
ii. 'Exploration for Disaster Prevention'
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 through real life experiences exploring the town in which they live. Given the heightened awareness of disaster prevention following the Great East Japan Earthquake, the number of entries submitted to this 'safety map-making campaign' for disaster prevention has been steadily increasing. This year we received a total of 2,191 from 449 groups, a record number since the campaign began.
The panel of experts has chosen 15 winners, 7 of which will be invited to an awards ceremony on January 25, 2014.
(2) Improving comprehensibility and instilling a greater sense of security for worry-free general insurance
i. Promoting financial education
In order to promote understanding of general insurance, we are offering a series of lectures with titles such as an 'Introduction to General Insurance' at 18 national and private universities. In addition to the GIAJ, our member companies and the Independent Insurance Agents of Japan, Inc. dispatch lecturers, who, based on their actual experiences, give clear explanations about the history of general insurance from the perspective of changes to society and the environment, the usefulness of insurance, and the process that takes place from the occurrence of an accident to claim payment(s) being made, etc. Students highly appreciate these hands-on lectures as being very practical.
The GIAJ, as a provider of financial and insurance education, is participating in discussions at the Financial Services Agency's 'Council on Promotion of Financial and Economic Education', which was established in June. We are making a contribution to the council by marshalling the content of financial literacy that each age group should acquire, and offering tools to promote understanding of the necessity of general insurance.
ii. Measures on harmonization and standardization
To improve customer convenience and enhance the operational efficiency of both insurance agents and insurers, we are working on the harmonization and standardization of rules and forms, including administrative procedures on insurance solicitation and application forms that customers are required to fill in.
We decided to newly implement 10 measures during the last 6 months, including the development of prototypes of explanatory materials on important matters, which customers look at when concluding an insurance contract, and industry-wide criteria for appropriate insurance solicitation. We will strive to achieve more goals during the target period of the Sixth Mid-Term Business Plan.
iii. Improving the standard of agents and solicitors
In order to register solicitors, insurance sales staff are required to pass a basic examination that falls under the examination system for general insurance solicitors that the GIAJ implemented in October 2011. With a view to further improving the standard of solicitors, since December 2013, we have required sales staff dealing with automobile, fire, and personal accident and health insurance to pass examinations for each line of business before selling these products.
To help general insurance solicitors acquire further knowledge and business skills, the GIAJ also has an accreditation system called the 'General Insurance College Course'. As of the end of November, the course had accredited over 45,000 sales staff as 'General Insurance Planners'.
In addition, in April 2013, we launched a new educational program called the 'Consulting Course' to develop accredited 'General Insurance Total Planners' with more practical knowledge and business skills.
As it is essential for us to enhance the knowledge and skills of general insurance solicitors in order to increase customer confidence in general insurance, we will strive to continue the above measures.
iv. Responses to the challenges of the Residential Earthquake Insurance system
The Ministry of Finance's 'Residential Earthquake Insurance Project Team' published a report in November 2012, which highlighted issues to be improved regarding the Residential Earthquake Insurance system.
As a task requiring urgent attention, the report identified the need to raise the system's resilience. This was addressed in May through a review of burden sharing between the government and the industry. Issues regarding product-appeal and premium rates, which were identified as challenges to be addressed promptly, will be dealt with by the revision of the system in July 2014.
At follow-up meetings on November 27 and December 19, the GIAJ reported on the progress of each identified issue. We will continuously strive to carry out our social responsibility as a general insurance industry, so that the Residential Earthquake Insurance system will instill a greater sense of security and win the confidence of customers.
(3) Future measures for the industry’s sustainable development and sound growth
i. Enhancing rules regarding insurance solicitation and sales
In response to a report by the Financial System Council’s 'Working Group on Insurance Products and Services', we established a project team in September to sort out the challenges in ensuring that member companies and agents respond to future regulatory reforms.
ii. Tax reform petitions for fiscal 2014
As part of the package of fiscal 2014 tax revisions published on December 12, another five-year extension was given to a transitional measure (which was due to expire in fiscal 2014) that exempts interest generated by saving premiums accounts of general insurance companies from deduction of interest on borrowed funds. We called on the necessity of this measure as a priority issue to prevent savings-type insurance policyholders from being penalized against the taxation theory.
iii. Voicing our opinions on international regulatory issues
In October, the IAIS's 20th Annual Conference was held in Taipei. At the conference, the IAIS announced its plan to develop the first-ever global insurance capital standard (ICS). We expressed our support for the development of the ICS on the condition that it will be reasonable and easy to explain.
In October, we also expressed our opinion on the revised exposure draft of the International Financial Reporting Standards 'Insurance Contracts' (IFRS 4), which the IASB (International Accounting Standards Board) published in June 2013. We pointed out that the new standards would increase the preparation costs of financial statements and make it rather difficult for users to understand them.
iv. Providing support to Asian regions and countries
Since fiscal 2012, we, together with the General Insurance Rating Organization of Japan and the Non-Life Insurance Institute of Japan, have been providing support for the establishment of an Indonesian rating organization as part of our measures to offer soft infrastructure and know-how to Asian regions.
In addition, with the purpose of promoting exchanges with and contributing to the insurance industries of the ASEAN members, whose economic growth has been steadily increasing, we dispatched a panelist for the first time to the ASEAN Insurance Congress held on December 3.
From December 16 through 18, a group of 15 representatives from private insurers in Myanmar visited Japan. To cooperate in the development of Myanmar's insurance industry, we introduced our advanced and forward-looking measures.
The overall half-year results of our 26 member companies improved on a year-over-year basis mainly due to a sharp increase in gross investment return thanks to continued high stock prices. While differing in degree, signs of improvement in the profitability of automobile insurance have also been seen.
Assuming the moderate domestic economic recovery seen in the first half continues through the second half of the fiscal year, we think we can expect an increase in insurance premiums and investment income due to the business performance of general insurance companies being closely linked to corporate activities and consumer spending. While risk factors such as sudden changes in financial markets and natural disasters exist, we basically expect steady financial results.
Our member companies will continue with further efforts to offer products and services which meet customer needs, so that we can contribute to the country's sound economic growth. Your continued support and cooperation are both greatly appreciated.