The GIAJ Chairman's Statement (Translation)
(Dec. 18, 2014

Kengo Sakurada, ChairmanKengo Sakurada, Chairman

 It has been around six months since I was appointed Chairman of the GIAJ.
I would like to report on our activities and related events since.

1. Our key activities so far

(1) Disaster prevention and reduction

i. Participation in the Third UN World Conference on Disaster Risk Reduction

 The UN conference will be held in Sendai City, Japan, in March 2015. We submitted an application to participate in public forums on earthquake insurance and disaster prevention education, and recently our participation was formally decided. Our sessions will include speeches and panel discussions on Japan’s earthquake insurance system, a legislated private and public sector risk-sharing scheme, and on disaster prevention education with an eye to the decade ahead. We will also hold an awards ceremony for the winners of our annual 'Exploration for Disaster Prevention' map-making competition.

 Sendai was seriously affected by the Great East Japan Earthquake four years ago. The conference aims to offer up-to-date information and knowledge about disaster prevention in Japan and around the world. Taking advantage of the roles we fulfilled after the quake and the lessons learned from it, we seek to contribute to the development of a global disaster prevention and reduction culture.

ii. ‘Exploration for Disaster Prevention’

 We are holding our eleventh annual 'Exploration for Disaster Prevention' event, where schoolchildren learn about disaster prevention, crime prevention, and traffic safety through hands-on experiences, by exploring their neighborhood to create a safety map. Following the recent occurrence of large-scale disasters such as torrential downpours, there have been an increasing number of maps showing degrees of potential water exposure in times of heavy rainfalls and typhoons, based on hazard maps and other information sources. Many participants living in coastal areas included in their maps evacuation routes to higher ground assuming a tsunami threat. This year we received a total of 2,267 maps from 511 groups (17,187 children), marking a record-high.

 The panel of experts will choose 17 winners. Out of them, 9 groups will be invited to the awards ceremony to be held in Sendai on March 15, 2015, along with the UN World Conference on Disaster Risk Reduction.

iii. Disaster prevention and reduction education curriculum

 The GIAJ decided to take part in a project by the Ministry of Education, Culture, Sports, Science and Technology to promote learning activities on Saturdays, as a volunteer supporter from fiscal 2015.

 Targeted at elementary, junior high, and high school students, the project provides a variety of educational and hands-on activities at the community level. We plan to offer our educational curriculum including the ‘Exploration for Disaster Prevention’ program in collaboration with schools and relevant groups such as PTAs to actively engage in the promotion of disaster prevention and reduction education, taking local characteristics into account.

(2) Responses to international regulatory issues

 In October, the International Association of Insurance Supervisors (IAIS) held its 21st Annual Conference in Amsterdam. Along with the conference, a hearing session was convened to receive input from IAIS observers on the global risk-based insurance capital standard (ICS), which the IAIS is currently developing. The GIAJ, jointly with the Life Insurance Association of Japan, made a presentation expressing support for the development of the globally consistent ICS, which could lead to the enhancement of group-wide risk management and a reduction in regulatory costs. We also submitted various proposals such as the use of the ICS as an early waning indicator as well as a communication facilitator among members of an insurance group’s supervisory college.

(3) Infrastructure support to Asian regions and countries

 We dispatched lecturers to a seminar held in Kuala Lumpur on October 30 as part of an assistance program for the development of financial infrastructure conducted by the Ministry of Finance, in collaboration with the Financial Services Agency (FSA), the Bank of Japan, and others, under the bilateral financial cooperation agreement made between Japan and Malaysia. In the seminar to provide technical assistance for insurance supervisors of Cambodia, Laos, Myanmar, and Vietnam, we introduced Japanese systems that could benefit the development of each country’s general insurance industry, such as measures against insurance fraud (one of our priority issues), Enterprise Risk Management (ERM) measures taken by our member companies, and regulatory issues in Japan as well as at the international level including the IAIS.

 On November 6, we took part in a workshop in Vietnam hosted by the FSA. Representing the industry, the General Insurance Rating Organization of Japan explained the rating calculation system, following the FSA’s presentation on the Japanese Insurance Business Act. In addition, there were active discussions among participants including the GIAJ. It was decided that technical assistance to Vietnam would continue. We have also been engaged in similar efforts in Indonesia, and will promote measures to contribute to the improvement of financial infrastructure in Asia.

2. Implementation of the Seventh Mid-Term Business Plan

 At our board meeting today, the outline of the Seventh Mid-Term Business Plan (from fiscal 2015 to 2017) was decided. As the main goal, we are determined to achieve sound development of the industry, raise the level of the public's confidence in us, and contribute to a more secure, safer society. We will concentrate our efforts on key issues such as the super-aging society, globalization, emerging risks, and natural disasters, in consideration of the environment surrounding us in the coming 5 and 10 years and its impact on the industry. By sorting out concrete measures for each priority issue, we will accelerate our efforts to develop the plan.

 As part of our response to the super-aging society, we decided to establish a task force under the 'Customer's Voices and Experts Advisory Council, following discussions at the council’s meeting earlier this month. The task force will consist of external experts to examine various challenges the super-aging society may cause.

Outline of priority issues

 1.The super-aging society
 3.Emerging risks
 4.Natural disasters
 5.Insurance crime
 6.Establishment of new systems for insurance solicitation
 7.Consumer consultations, complaints, and dispute settlement
 8.Consumer education

3. Conclusion

 The government’s revised growth strategy approved by the Cabinet in June emphasizes the importance of more enhanced corporate governance as a global standard whereby companies are expected to autonomously reform their operations to improve profitability and productivity. Currently, an expert council on a corporate governance code organized by the FSA and the Tokyo Stock Exchange is carrying out studies on such a code for listed companies. According to publicized documents dated December 12, it is expected that the expert council will offer several assertive proposals regarding the essential functions of a board of directors, such as demanding they show the strategic direction of the company, supervise management in a sufficiently effective manner, and evaluate the mid-to long-term economic rationality and future expectancy of so-called ‘strategic stock investment’ (interlocking stock ownership) while strictly analyzing its risks and returns.

 General insurance forms an important part of the overall social infrastructure. We are aware that it is crucial for us to apply further measures to achieve sustainable growth and increase corporate value from a mid- to long-term standpoint and that the content of the corporate governance code has to be given careful attention.

 The GIAJ is determined to complete the implementation of the Sixth Mid-Term Business Plan as well as to develop the next business plan. Your continued support and cooperation are both greatly appreciated.