The GIAJ Chairman's Statement (Translation)
（Sep. 18, 2014）
I would like to report progress on our major initiatives since I assumed office as Chairman of the GIAJ in June, and offer my views as follows:
First of all, I wish to extend our sincerest condolences to the victims and those affected by the recent disasters, including the torrential downpour in August.
We will continue making full efforts to ensure proper and prompt payment of claims, so that general insurance can help rebuild the affected people’s lives.
2. Our key activities so far and issues to be addressed going forward
(1) Reduction in social losses to build a more secure, safer society
i. Prevention of insurance fraud and fraudulent claims
In order to prevent misuse of the insurance system, including insurance fraud and false claims, we are working on the enhancement of an industry-wide database of such claims, as well as utilization of a system to visualize and analyze connections among fraudulent claimants. We are also developing a system to identify suspicious claims, which will enable insurers to efficiently refer to records of past insurance claims. The launch of the system is scheduled for fiscal 2015.
We will continue our efforts to make sure systems are in place to effectively prevent fraudulent claims.
ii. ‘Theft Prevention Day’
Since 2001, we have been participating in the ‘Government-Private Sector Joint Automobile Theft Prevention Project Team’ as secretariat for private participants. The project team consists of 4 government authorities and 19 private organizations. Our relevant efforts include continuous promotion of the installation of immobilizers (a security device).
Since setting October 7 as ‘Theft Prevention Day’ in 2003, we have been engaged in annual auto theft awareness-raising activities across the country.
The number of known vehicle thefts between January and July this year was 9,157, a decrease of 27.9% from the same period last year. However, constant countermeasures are essential, as particular areas are still troubled by frequent vehicle thefts. On October 7 this year, we will conduct country-wide awareness-raising activities in cooperation with the police and the Independent Insurance Agents of Japan Inc., including handing out leaflets at various locations.
iii. Promoting Residential Earthquake Insurance
Starting November, we will run our annual advertising campaign through various media outlets, such as television, newspapers, the Internet, and radio, to raise public awareness of Residential Earthquake Insurance as well as the level of its penetration nationwide. Residential Earthquake Insurance is a legislated private and public sector risk sharing scheme that serves an important role in providing financial means to those affected by earthquakes to get back on their feet as soon as possible.
This year, we created leaflets focusing on earthquake insurance products for household goods. The leaflets are being distributed through our member companies to promote the fact that such insurance products can be used as an aid for victims who have existing mortgages to rebuild their lives.
(2) Improving comprehensibility to help customers understand general insurance more deeply
i. Proper responses to the elderly
In a super-aging society, it is of more importance to consider carefully how we respond to elderly customers. In June, as part of further efforts in this area, we drew up guidelines covering insurance solicitation to the elderly.
Based on the expectation of a fully-fledged transformation into a super-aged society, we will further examine our tasks to address these changes.
ii. Improving the quality of insurance solicitation
Since the start of the additional accreditation system, 8,189 people (as of the end of August) had been certified by the GIAJ as ‘General Insurance Total Planners’, our most prestigious qualification.
Across the country, nearly 2 million general insurance solicitors are engaged directly with customers by providing services such as explanation of general insurance products and contract processing. To help them acquire further knowledge and business skills, we have established an education system called the ‘General Insurance College Course’. Those who have passed the top-level examination after studying for one year under the course are certified as ‘General Insurance Total Planners’.
This month, our homepage began to provide information on general insurance agents to which ‘General Insurance Total Planners’ belong.
(3) Improving the general insurance business environment to provide services in a sounder, more stable manner
i. Responses to the revision of the Insurance Business Act and Civil Code
The recent revisions made to the Insurance Business Act include requirements to correctly confirm customer intent and provide appropriate information, and to maintain the defined level of standards regarding agents and solicitors. Based on the revisions, cabinet and ministerial orders as well as supervisory guidelines, which stipulate regulation details, are scheduled to be revised. We will sort out possible challenges in dealing with these new changes. As for our measures to ensure that all agent employees match the enhanced requirements clarified in the revised ‘Comprehensive Guidelines for the Supervision of Insurance Companies’, each member company is examining contract patterns regarding agent employees, while taking necessary steps, such as a review of employment systems and enhancement of management and education.
In August, the Working Group on the Civil Code (Law of Obligations) under the Legislative Council of the Ministry of Justice decided on a draft outline of revision of the Code. The proposal is aimed at revising the Law of Obligations, which has been maintained for over 100 years as a basic discipline on contracts, including application of the statutory interest rate, which is currently fixed though slated to become variable, when deducting interim interest in the calculation of damages. As it includes revisions that would affect general insurance business practices in various ways, such as causing confusion in liability claim handling procedures, we have striven to reflect the industry’s views in the proposal, that there should be some consideration for the frequency of interest rate change and the calculation methods applied at the time of revision. We will continue observing the proceedings of the discussions to finalize the outline, while working towards appropriate responses in terms of business practices.
ii. Providing infrastructure support to Asian regions and countries
We held an ISJ (Insurance School (Non-Life) of Japan) overseas seminar in Bangkok on September 2 and 3. With a view to offering technical assistance and promoting exchanges among the general insurance industries of East Asia, the GIAJ and the General Insurance Institute of Japan have hosted the ISJ program since 1972. In addition to overseas seminars, we hold general and advanced courses annually in Tokyo. Contributing to the development of general insurance business in the region, to date 1,834 officers and employees of general insurers and regulators from East Asia have attended.
Targeting insurance supervisors of Cambodia, Laos, Myanmar, and Vietnam, in October, we will also 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.
iii. Tax reform petitions for fiscal 2015
In July, we set out our requests for tax reforms for fiscal 2015, and submitted them to the relevant authorities. Our requests include ‘the elimination of double taxation on dividend income, etc.’ as a priority, and ‘the resolution of issues regarding the consumption tax applied to general insurance’. We will strive towards the achievement of these requests.
As for ‘the elimination of double taxation on dividend income, etc.’, we are calling for an increased exemption ratio so that corporate stockholders in Japan will not be placed at a disadvantage, given that the system, which allows dividends and certain other income to be exempted from profit, is common practice around the world.
With respect to ‘the resolution of issues regarding the consumption tax applied to general insurance’, our requests include examination of fundamental measures to resolve the issues, such as tax accumulation and damage to tax neutrality, which have become of more significance due to the consumption tax hike.
In July, we launched a project team to study issues in consideration of the development of the Seventh Mid-Term Business Plan that will begin in 2015.
It is crucial for us to adequately examine the current situation surrounding the general insurance industry, environmental changes and their influences on the industry in the coming 5 and 10 years, including the super-aging society, natural disasters, and technological innovation. The project team is carrying out studies of various issues, such as challenges to be addressed by the general insurance industry, roles to be undertaken by the GIAJ, and the preparation necessary to promote our efforts, from various perspectives, including a mid- to long-term standpoint.
Your continued support and cooperation are both greatly appreciated.