The GIAJ Chairman's Statement (Translation)
（June 12, 2014）
I would like to report the progress made on our major initiatives during my one-year tenure and offer my views.
Since last year, the government's various economic and fiscal policies as well as growth strategy have gone into high gear. Despite concerns about the possibility of a reverse effect following the spike in demand ahead of the consumption tax hike in April this year, the moderate domestic economic recovery has continued, leading to sound economic growth.
While the general insurance industry was affected by the heavy snowfall in February 2014, the settlement of accounts for fiscal 2013 was generally favorable, mainly thanks to an improvement in investment income. In addition, the loss ratio of automobile insurance, though still on the high side, has shown signs of steady improvement.
Although we have seen improvement in the industry's domestic business environment, when we look from a mid- to long-term standpoint, it is necessary to correctly perceive the rapidly aging population and the falling birthrate, which will inevitably lead to a depopulating society. We, the general insurance industry, with an accurate perception of such changes in society and the needs of our customers, recognize that we need to implement steps to establish a foundation for sound and sustainable development of the industry.
2. Implementation of the Sixth Mid-Term Business Plan
We have advanced the following measures on priority issues that we identified at the beginning of my tenure.
(1) Reduction in social losses due to accidents, disasters, and crimes to build a safer society
i. Prevention of insurance fraud and fraudulent claims
The GIAJ and our member companies are making concerted efforts to prevent insurance fraud and fraudulent claims.
As there is a limit on each general insurance company's ability to detect fraudulent claims, we share relevant information on an industry-wide database, and, where appropriate, cooperate with the police to expose insurance fraud and fraudulent claims.
Moreover, we have recently decided to develop a system to identify suspicious claims, which will enable insurers to efficiently refer to records of past insurance claims. The system is designed to offer such information to general insurance companies at the early stages of accident responses. We plan to first provide information related to personal accident insurance from 2015, and expand its scope to other lines one by one thereafter.
We introduced a system to visualize connections among fraudulent claimants, and to detect organizations repeatedly involved in false claims in June 2013 and started to operate it from May 2014.
The effects of measures to prevent insurance fraud and fraudulent claims can be made greater by taking the following three measures in a combined manner: 'Establishment and enhancement of an industry-wide database', 'Development of investigation and response systems', and 'Promotion of awareness-raising activities'. We will continue to implement effective measures to further prevent fraudulent claims.
ii. Promoting disaster prevention, crime prevention, and traffic safety
Taking advantage of various occasions and the media, we are offering disaster prevention, crime prevention, and traffic safety know-how that the industry has accumulated.
In fiscal 2013, we held our tenth annual 'Exploration for Disaster Prevention' event where schoolchildren learn about disaster prevention, crime prevention, and traffic safety through their actual experiences, by exploring the town where they live to create a safety map. This time, we had a record number of 2,191 entries submitted to the 'safety map-making campaign'. The program raises safety awareness among children and is also useful in the promotion of community-based disaster prevention education. Given the heightened awareness of disaster prevention following the Great East Japan Earthquake, public understanding and support for disaster prevention education have steadily been enhanced. We will continue our support in this field.
Recently there have been cases where courts of law have ordered payment of large amounts of reparation regarding bicycle accidents. We are sending our employees to lecture at seminars across the country to promote understanding of the fact that bicycle riders can be perpetrators in traffic accidents, and to disseminate information on safer bicycle riding. We are also striving to offer information on insurance products that cover bicycle-related claim payments, including personal liability insurance and personal accident insurance, to encourage worry-free bicycle riding.
In addition, we are engaged in promotional activities at the local level. Our regional branch offices act as operational bases for activities such as 'Theft Prevention Day' events, diffusion of information calling for attention regarding perilous crossroads around the country and proposals to reduce accidents.
(2) Improving comprehensibility and instilling a greater sense of security for worry-free general insurance
i. Measures on harmonization and standardization
To improve customer convenience and enhance the operational efficiency of insurance agents and insurers, we are working on the harmonization and standardization of rules and forms, including administrative procedures on solicitation and application forms that customers are required to fill in.
As for explanatory materials on important matters, which customers refer to when concluding an insurance contract, we have completed prototypes that are more comprehensible by reducing the amount of text and adding charts and diagrams. We submitted the prototypes to the Financial System Council’s 'Working Group on Insurance Products and Services', and reflected them in the 'Guidelines for Policy Overview and Warning Information' in September 2013.
We also completed 50 other cases up to March 2014, such as harmonization of types and forms of contract documents. We will make constant efforts on further development in this field.
ii. Improving the standards of agents and solicitors
In order to increase customer confidence in general insurance, it is essential to enhance the knowledge and skills of general insurance solicitors.
Since December 2013, we have required sales staff dealing with automobile, fire, and personal accident and health insurance to pass the General Insurance Solicitor Examinations for each line of business before selling these products.
In addition, to help general insurance solicitors acquire further knowledge and business skills, the GIAJ, together with the Independent Insurance Agents of Japan, Inc., introduced an education system called the 'General Insurance College Course' in July 2012.
So far, approximately 50,000 sales staff members have been certified by the GIAJ as 'General Insurance Planners' after passing the expert course examinations. Furthermore, having studied for our most prestigious qualification that includes more practical knowledge and business skills, the first group of 'General Insurance Total Planners' will be certified at the end of this month.
The GIAJ will continue to make steady efforts to further enhance the knowledge and skills of general insurance solicitors.
iii. Promoting financial and economic 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 universities. Moreover, 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', contributing to improvement in general insurance literacy among consumers.
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 highlighting issues to be improved regarding the Residential Earthquake Insurance system. Following this, measures such as a review of burden sharing between the government and the industry to prepare for the possibility of the consecutive occurrence of giant earthquakes, and a review of earthquake insurance rates scheduled for July 2014, have been undertaken. At the project team's follow-up meetings held from November 2013 until January 2014, we reported on the progress made by the general insurance industry on the issues identified in the above-mentioned report, including new methods for more efficient damage assessments.
Earthquake insurance can play a very important role as a 'self-help' measure in that it helps those affected to get back on their feet immediately. We will continue to work on further improving its market penetration. The GIAJ, in collaboration with the government, will strive to build public trust and confidence in the Earthquake Insurance system.
v. 'Customer's Voices and Experts Advisory Council'
On June 2, we held a meeting of the 'Customer's Voices and Experts Advisory Council'. At the event, we received various views from the council on topics such as the industry's measures to prevent insurance fraud and fraudulent claims, and responses to the aging population. We will utilize those opinions for our activities.
(3) Future measures for the industry’s sustainable development and sound growth
i. Enhancing rules regarding insurance solicitation and sales
In this ordinary session of the Diet, a bill to revise the Insurance Business Act was promulgated. The revisions are based on the report by the Financial System Council’s 'Working Group on Insurance Products and Services', and include a large-scale review of rules regarding insurance solicitation and sales. It is expected that an examination of relevant detailed rules will be accelerated. Ahead of the revisions, administrative and supervisory responses according to the working group's report have been made with regard to rules for agents and solicitors.
We established a project team to respond to the report in order to sort out possible challenges and coordinate information-sharing, so that our member companies and agents can deal appropriately with future regulatory reforms.
ii. Voicing our opinions on international regulatory issues
International organisations such as the International Association of Insurance Supervisors (IAIS) are examining new global frameworks and regulations, including measures to ensure stability of the financial system and fiscal soundness, and a framework to supervise Internationally Active Insurance Groups.
As part of its efforts to promote financial stability and fiscal health, the IAIS is working on the development of capital regulations including the global Insurance Capital Standard (ICS). We have voiced our opinions on various occasions.
iii. Providing support to Asian regions and countries
We have hosted the ISJ (Insurance School of Japan) program for more than 40 years, with a view to promoting mutual understanding and exchanges among respective general insurance industries.
In fiscal 2013, we promoted exchanges with insurance associations and concerned parties in Asia, including offering support for the establishment of a rating organization in Indonesia, dispatching a panelist to the ASEAN Insurance Congress, receiving a visit of representatives from private insurers in Myanmar, and participating in the International Forum on inclusive insurance, hosted by the Financial Regulatory Commission of Mongolia and the United Nations Development Programme.
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, by providing know-how on advanced systems and soft infrastructure, which our general insurance industry has taken a long while to cultivate.
Upon taking up the post of Chairman of the GIAJ, I set the goal of speeding up the implementation of the Sixth Mid-Term Business Plan. For the past year, we have worked on our priority issues of 'Reducing social losses', 'Improving comprehensibility and instilling a greater sense of security', and 'Improving the general insurance business environment'. We believe that we have steadily advanced each of these issues.
I would like to express sincere gratitude for your warm support and cooperation, which we have received during my one-year tenure.
We, the general insurance industry, will continue to undertake various measures to contribute to the country's economic growth and a more worry-free, safer society, by understanding customer needs and offering better products and services.
Your continued understanding and cooperation are both greatly appreciated.