Upon taking up the post of Chairman of the General Insurance Association of Japan (GIAJ)
（June 30, 2014）
As the newly appointed Chairman of the GIAJ, I would like to express my opinions as follows:
1. Situation in the general insurance industry
Thanks to the government's various economic policies, Japan's economy is showing signs of continuous growth. We expect that the effect on the economic climate of the consumption tax hike in April this year to be only temporary, due to a recovery in private-sector demand largely buoyed by consumer spending. This moderate domestic economic growth will continue into the second half of 2014. In June 2014, the government announced that the 'Basic Policies for Economic and Fiscal Management and Reform (Basic Policies)' and 'Growth Strategy' will be revised, which has raised expectations for the government's policy management to achieve medium- to long-term economic expansion. In addition, Tokyo’s hosting of the Olympic and Paralympic Games in 2020 is also likely to contribute to long-term economic growth. Thus, we increasingly see signs of new growth in Japan's economy.
However, we see that the situation surrounding the general insurance market, which is closely linked to economic trends, cannot be taken lightly. For example, looking from a mid- to long-term standpoint, it is assumed that the depopulating society will negatively affect potential growth rates.
In order for the general insurance business to gain public support under such an environment as a contributor to a more secure, safer society, it is necessary to recognize various factors, including the super-aging society, changes in public needs, and the advancement of Information and Communication Technology (ICT), and to strive to offer new insurance products and services to deal with risks faced by individuals and companies.
2. Our strategic direction
(1) Social role of the general insurance industry
General insurance has a social role in continuously providing better products and services to support social stability and economic development, and to help build a worry-free, safe society. We are determined to steadily fulfill this role by achieving sound development of the general insurance industry and raising the level of the public's confidence in us.
Due to the unified post-disaster responses of the industry, the total amount of claims paid for the Great East Japan Earthquake reached more than 1.2 trillion yen within a relatively short timeframe. In our country, which is prone to earthquakes, Residential Earthquake Insurance plays a highly public role. It is a legislated private and public sector risk-sharing scheme, designed to provide financial means to those affected by earthquakes to get back on their feet as soon as possible. In July this year, the earthquake insurance system including rates and premiums will be revised. We, in unison with the government, will continue to carry out studies on achieving a more resilient and easier-to-understand earthquake insurance system, and methods for more appropriate damage assessments. We will also continue to work on further improving the market penetration of earthquake insurance.
In recent years, large-scale natural disasters have occurred worldwide. There is growing concern that these disasters are the 'new normal'. We, the general insurance industry, will help make society more resilient to disasters through various measures such as promoting products including earthquake insurance, and providing risk-consulting services to reduce disaster losses.
In March 2015, the Third UN World Conference on Disaster Risk Reduction will be held in Sendai City, Japan. We are planning to actively take part, as we did on the last occasion, taking advantage of the roles we fulfilled after the Great East Japan Earthquake and the lessons learned from the disaster.
On July 1, we will launch the 'General Insurance Contracts Inquiry System for Natural Disasters'. This permanent contact point covers all types of general insurance. It is designed to receive and handle inquiries from policyholders in areas where the Disaster Relief Act has been invoked, about which insurers their natural disaster insurance contracts are concluded with. In order to ease our customers' anxiety as well as to ensure prompt payment of insurance claims, we will cooperate with our member companies to enhance the system.
(2) Entering the last year of the Sixth Mid-Term Business Plan
As 2014 is the last year of the Sixth Mid-Term Business Plan that started in 2012, we will speed up the implementation of key issues, particularly focusing on our priority issues of 'Reducing social losses', 'Improving comprehensibility and instilling a greater sense of security', and 'Improving the general insurance business environment'.
(3) Responding to a super-aging society
In Japan, those aged 65 or more will account for about 30% of the population in 2020 and nearly 40% in 2050. Based on the expectation of the coming full-fledged transformation into a super-aged society, it is necessary for the general insurance industry to contribute to the country's responses to the aging population, which could serve as a model for other countries. In order to help improve the quality of life of the elderly, we will strive to offer insurance products and services that promote technological innovation and the development of new industries.
We will broadly examine our tasks to respond to the super-aging society, in consideration of the development of the Seventh Mid-Term Business Plan that will begin in 2015.
3. Specific measures
(1) Reduction in social losses to build a more secure, safer society
One of our industry’s most important missions is to reduce social losses due to accidents, disasters, and crimes, and thereby contribute to a worry-free and safe society for consumers. We will engage in a broad range of activities including measures to prevent insurance fraud and false claims, and offer safety education programs to reduce accidents.
i. Prevention of insurance fraud and fraudulent claims
We have already taken various measures to prevent misuse of the insurance system, including insurance fraud and false claims, such as the establishment of the 'Insurance Fraud Prevention Office' and the 'Insurance Fraud Hot-line'. As part of our efforts to enhance an industry-wide database on fraudulent and false claims and to analyze such data, we have introduced a system to visualize and analyze connections among fraudulent claimants. Moreover, we have recently decided to develop a system to offer records of past insurance claims to general insurance companies.
During this fiscal year, we will continue to enhance databases, work on awareness-raising activities using posters, and conduct research into relevant initiatives taken in other countries such as the utilization of industry-wide databases and systems. We will also conduct additional consumer surveys and take other measures, in order to prevent fraudulent claims more effectively.
ii. Promotion of safety and disaster prevention education
Taking advantage of the know-how we have acquired we are actively promoting disaster prevention education. This year, we will hold our eleventh 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 towns in which they live. The awards ceremony is scheduled to be held in Sendai City in March 2015, when the UN World Conference on Disaster Risk Reduction will be held.
In addition, we will help people better understand precautions against risks in their daily lives, such as prudent safety measures to take when riding bicycles and strategies for reducing accidents involving senior drivers, subjects in which we see society has a growing interest.
(2) Improving comprehensibility to help customers understand general insurance more deeply
In order to further promote understanding of general insurance products and services among consumers, we will advance various measures designed to improve comprehensibility.
i. Measures on harmonization and standardization
To improve customer convenience, we, in cooperation with our member companies, will work to promote appropriate insurance solicitation and claim payments, and improve the quality of insurance business administration.
While we have already developed guidelines for solicitation materials, administrative procedures on insurance solicitation, and claim payments, we will further advance our efforts on harmonization and standardization during this fiscal year.
ii. Proper responses to the elderly
In a super-aging society, it is of more importance to consider careful responses to elderly customers. From this standpoint, the 'Comprehensive Guidelines for the Supervision of Insurance Companies' was revised in February 2014, according to which we are examining particular points of attention regarding proper insurance solicitation to the elderly in terms of customer protection.
In June 2014, we drew up guidelines covering solicitation to the elderly. We will continue to work on related issues.
iii. Improving the quality of insurance business administration
To help general insurance solicitors acquire further knowledge and business skills, we, together with the Independent Insurance Agents of Japan, Inc., have been operating an education system called the 'General Insurance College Course'. So far, approximately 50,000 sales staff members have been certified by the GIAJ as 'General Insurance Planners'. Furthermore, having studied for our most prestigious qualification, the first group of 'General Insurance Total Planners' was certified today.
As for the overall general insurance business, we receive and consider views and opinions from the 'Customer's Voices and Experts Advisory Council', which widely discusses challenges and issues regarding the industry, and the 'General Insurance ADR Center (General Insurance Counseling and Alternative Dispute Resolution Center)'. We will continue to improve the quality of insurance business administration.
(3) Improving the general insurance business environment to provide services in a sounder, more stable manner
We will promote measures to improve the general insurance business environment, with the goal of service provision in a sounder, more stable manner, so that the industry can contribute more to the country's economic growth as well as to the continued development of a worry-free and safe society. As part of our efforts, we are actively voicing opinions about a wide range of topics including domestic and international issues regarding social systems, regulations and taxation systems.
i. Responses to the revision of the Insurance Business Act
The revisions made to the Insurance Business Act earlier this year will greatly influence general insurance solicitation practices, including requirements to correctly confirm customer intent and provide appropriate information, and to maintain the defined level of standards regarding agents and solicitors. Together with our member companies, we will make steady efforts to cope with the enforcement of the revised law, so that we can increase customer confidence in our industry.
With regards to rules for agents and solicitors, we are also working on administrative and supervisory responses that have been made according to a report by the Financial System Council’s working group.
ii. Responses to international regulatory issues
The globalization of finance and insurance is heightening the necessity of convergence of international supervisory and regulatory standards. International organisations such as the International Association of Insurance Supervisors (IAIS) are discussing new regulatory and supervisory standards, on which we will continue to submit our opinions.
iii. Providing infrastructure support to Asian regions and countries
With a view to offering assistance in the field of insurance and promoting exchanges among general insurance industries in East Asia, the GIAJ and the General Insurance Institute of Japan have hosted the ISJ (Insurance School (Non-Life) of Japan) program since 1972. We, together with the General Insurance Rating Organization of Japan and the General Insurance Institute of Japan, have also worked to offer our know-how to emerging countries, particularly in Asia, on soft infrastructure such as an insurance rating system, which has taken our industry a long while to cultivate.
This year, we are scheduled to dispatch lecturers to a technical assistance program hosted by the Ministry of Finance in coordination with the Financial Services Agency and the Bank of Japan, targeting insurance supervisors of Cambodia, Laos, Myanmar, and Vietnam. We will continue to actively engage in technical assistance to contribute to the development of financial infrastructure in Asia.
iv. Response to tax reforms
In petitioning efforts on tax reforms last year, we requested as priority issues the elimination of double taxation on dividend income, etc. and the resolution of issues regarding the consumption tax system. We will work to draw up tax reform petitions with a comprehensible and sustainable tax system in mind, so that the general insurance industry can offer products and services in a more stable manner and contribute to a worry-free, safe society.
Given that risks are becoming increasingly complicated and sophisticated due to changes in society and business environment, general insurance companies are required to provide useful products and services that properly deal with the flow of the times. It is clear to us that as time goes on it will be more important than ever to contribute to the development of a more secure, safer society, and the sustainable growth of the country's economy, making use of new technologies such as ICT.
As Chairman of the GIAJ, I am committed to working diligently during my one-year tenure of office, steadily carrying out measures to tackle these challenges.
Your support and cooperation are greatly appreciated.