The GIAJ Chairman's Statement (Translation)
（June 11, 2015）
I would like to report on the progress made on our major initiatives during my one-year tenure and offer my views.
Over the past year, many natural disasters have inflicted severe damage and losses across Japan, including Typhoon Halong in August 2014, which was closely followed by a torrential downpour and consequent landslides in Hiroshima, the eruption of Mount Ontake in September, and the earthquake in northern Nagano Prefecture in November. We wish to once again extend our sincerest condolences to all who were affected by the disasters.
Fiscal 2014 was the last year of the Sixth Mid-Term Business Plan that started in 2012. Since I assumed office as Chairman of the GIAJ in June 2014, we have promoted the implementation of key issues, particularly focusing on our three priority issues of 'Reducing social losses', 'Improving comprehensibility', and 'Improving the general insurance business environment'.
Based on examination of the general insurance industry's tasks in consideration of the environment surrounding us in the coming 5 and 10 years, we started the three-year Seventh Mid-Term Business Plan in April.
2. Major initiatives in the last year of the Sixth Mid-Term Business Plan, and the general overview of the plan
(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 engage in a broad range of activities including measures to prevent insurance fraud and false claims, and the promotion of disaster prevention education.
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. Concrete measures include the establishment of the 'Insurance Fraud Prevention Office' in January 2013. In order to assess the state of insurance fraud, this specialized division of the GIAJ continually enhances its database and has started operating an 'Insurance Fraud Hot-line', which has so far received information on nearly 800 suspicious cases, producing tangible results in preventing insurance fraud.
We are striving to further strengthen our system infrastructure. In May 2014, we introduced a system to visualize connections among fraudulent claimants, for the purpose of detecting organizations repeatedly involved in false claims. In April this year, we launched the 'Insurance Claim History Information Sharing System' for insurance products covering bodily injury such as automobile insurance, where insurers share records of past insurance claims and utilize them in detecting suspicious claims at an early stage.
We will continue to implement effective measures to further prevent fraudulent claims, including an expansion of the above system's scope to all insurance lines.
ii. Promotion of safety and disaster prevention education
Taking advantage of the know-how we have acquired, we are actively promoting disaster prevention and reduction education, and offering information that contributes to disaster prevention and reduction, and traffic safety both through the media and on various other occasions.
We participated in the main conference as well as public forums of the Third UN World Conference on Disaster Risk Reduction, which was held in March this year in Sendai City, Japan. At the main conference, on behalf of the Japanese industry, I took part in a panel discussion of the working session titled 'Disaster Risk Transfer & Insurance'. I made a presentation on how effectively Japan's earthquake insurance system contributes to the early recovery and reconstruction of affected areas. In the two public forums, we offered information on earthquake insurance and disaster prevention education. During the forum on disaster prevention education, a panel of experts examined the 'Exploration for Disaster Prevention' activities that we have been holding for the past 12 years, and discussed the development of community-based disaster prevention education centering on children.
From fiscal 2015, the GIAJ is taking part in a project organized by the Ministry of Education, Culture, Sports, Science and Technology to promote learning activities on Saturdays, as a volunteer supporter. 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 and promote disaster prevention and reduction education, taking local characteristics into account.
(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
We have studied how solicitation materials can be improved to ensure more consumer-friendly, comprehensible sales explanations. In addition to the revision of the 'Guidelines for Policy Overview and Warning Information (Important Matters)' in September 2013, we have completed and released prototypes of explanatory materials on important matters, which customers refer to when concluding an insurance contract. In reference to the prototypes, our member companies are revising their explanatory materials.
In addition to the 'Guidelines on Solicitation to Elderly Customers' which we established in June 2014, we have worked on standardizing administrative procedures for claim payments, developing guidelines for insurance solicitation, and harmonizing rules and know-how regarding compliance. Over the past three years, we have completed standardization and harmonization of 68 issues.
ii. Improving the quality of insurance business administration
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 64,000 sales staff members have been certified by the GIAJ as 'General Insurance Planners' after passing the course's expert examinations. Furthermore, among 'General Insurance Planners', 9,596 people have been certified by the GIAJ as 'General Insurance Total Planners', our most prestigious qualification, since the first group was certified in June 2014. In September 2014, our website began to offer a page on general insurance agents to which 'General Insurance Total Planners' belong. As of June 1, 2015, information on 3,725 Total Planners (2,155 agents) has been posted on the page, and consumers can search for skilled agents who are working in their local area by inputting their postal address or postcode.
(3) Improving the general insurance business environment to provide services in a sounder, more stable manner
We 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 on a wide range of topics including both domestic and international issues regarding social systems, regulations and taxation systems.
i. Response to the revision of the Insurance Business Act and Civil Code
Revisions to the Insurance Business Act are scheduled to be implemented on May 29, 2016. They include requirements to correctly confirm customer intent and provide appropriate information, while maintaining the defined level of standards regarding agents and solicitors. This will greatly influence general insurance solicitation practices. In order to establish a better system and therefore improve the service quality of our industry, we have expressed opinions to the Financial Services Agency on the relevant consultations. To increase customer confidence in our industry, we will make steady efforts to cope with the enforcement of the revised act, including revisions to related guidelines and business procedures.
Proposed revisions to the Civil Code (Law of Obligations) include matters that are expected to have a significant impact on general insurance business practices, such as application of the statutory interest rate, which is currently fixed though slated to become variable, when deducting interim interest in the present value calculation of damages. Following consultations to which we expressed our views and concerns, a bill to revise the Civil Code is being presented in the current ordinary session of the Diet.
ii. Responses to international regulatory issues
The globalization of finance and insurance is heightening the necessity of convergence of international supervisory and regulatory standards, accelerating international standard-setting activities. We actively make requests and proposals regarding the development of standards by international organizations. In October 2014, we, jointly with the Life Insurance Association of Japan, made a presentation at the International Association of Insurance Supervisors (IAIS) hearing session to receive input from observers on the global risk-based insurance capital standard (ICS). At the IAIS stakeholder meeting held in Tokyo in May this year, the GIAJ also explained views on major concerns that the Japanese general insurance industry has about the ICS. We will continue to actively submit our opinions, so that new standards will be harmonized on a global level.
In March this year, India's Insurance Laws (Amendment) Bill was enacted, which allows for foreign direct investment in the insurance sector up to a limit of 49 percent, and establishment of reinsurance branch operations by foreign reinsurers. The GIAJ, through international networks such as the Global Federation of Insurance Associations (GFIA), had been calling on the country's government et al. to implement deregulation. India's insurance market has great developmental potential due to its low insurance penetration rate. With enhanced business opportunities for foreign companies including Japanese insurers, the market is expected to develop further.
iii. Infrastructure support to Asian regions and countries
We, together with the General Insurance Rating Organization of Japan and the General Insurance Institute of Japan, actively provide technical assistance regarding soft infrastructure such as insurance rate making systems to emerging countries mainly in Asia.
In October 2014, we dispatched lecturers to an insurance technical assistance program seminar held in Kuala Lumpur, which was organized by the Japanese Ministry of Finance and the Central Bank of Malaysia for insurance supervisors of Cambodia, Laos, Myanmar, and Vietnam.
Other efforts include cooperation with the presentation on the rate-making system made by the General Insurance Rating Organization of Japan at the Japanese Financial Services Agency's workshop, which was held in Vietnam in November 2014.
We will continue proactive efforts to contribute to improving the level of sophistication of the financial infrastructure of Asian countries, mainly through insurance technical collaboration.
iv. Tax reform petitions
Regarding tax reform petitions for fiscal 2015, although we requested as a priority 'the elimination of double taxation on dividend income, etc.', the package of fiscal 2015 tax revisions includes a reduction in the scope of the system to allow dividends, and certain other types of income, to be exempted from profit. For insurance companies, however, given the fact that this change could widely affect customers, an exception was made where, for dividends and certain other income from equities of which the insurer's ownership ratio is less than 5%, a 40% ratio of exemption from gross revenue will be permitted.
3. The Seventh Mid-Term Business Plan
In April this year, we launched the Seventh Mid-Term Business Plan (from fiscal 2015 to 2017).
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. In consideration of the environment surrounding us in the coming 5 and 10 years and its impact on the industry, we will concentrate our efforts on the following eight priority issues: 'the super-aging society', 'globalization', 'emerging risks', 'natural disasters', 'insurance crime', 'establishment of new systems for insurance solicitation', 'consumer consultations, complaints and dispute settlement', and 'consumer education'. As for the super-aging society, we established a task force in May that consists of external experts, and started to work on a detailed study of possible challenges and the roles that the industry should exercise.
It is assumed that Japan will continue to be hit frequently by natural disasters such as earthquakes, typhoons and floods, not to mention volcanic eruption disasters such as the one that occurred on the island of Kuchinoerabu last month. We recognize that one of our important missions is to utilize the broad, rich knowledge that we have acquired and to make proposals for disaster prevention and reduction measures according to local characteristics, in addition to our response to insurance needs for natural disasters as well as proper and prompt payment of claims to affected customers. We will promote various measures to help make society more resilient to disasters.
I would like to express my sincere gratitude for your warm support and cooperation, which we have received during my one-year tenure.
Your continued understanding and cooperation are both greatly appreciated.