The GIAJ Chairman's Statement (Translation)
（June 9, 2016）
I would like to report on the progress made on our major initiatives during my one-year tenure and offer my views.
Severe damage and losses were inflicted across Kumamoto and Oita Prefecture due to a series of earthquakes with the Japanese seismic intensity scale of 7 (magnitude 6.5 to 7.3). We wish to express our deep condolences to the victims and extend our sincerest sympathies to all who were affected by the disaster.
During my visit to the affected area in the wake of the quake, the overwhelming damage reminded me of the menace of natural disasters. We have responded to this disaster with a firm sense of our social mission of ensuring prompt payment of 'Earthquake Insurance on Dwelling Risks' claims.
We will continue to make full efforts for prompt payments, so that general insurance can help rebuild the affected people's lives.
2.Responses to the 2016 Kumamoto Earthquake
In order to organize swift decision-making for prompt, proper and fair claim payments utilizing centralized information, we established the Earthquake Insurance Central Command at our head office in Tokyo, the Earthquake Insurance Local Headquarters at our branch office in Fukuoka, and the local correspondence base in Kumamoto. The establishment of the Central Command is only the second case in the history of the GIAJ, the preceding one being for the Great East Japan Earthquake in 2011. The GIAJ and our member companies are making concerted efforts to reinforce post-disaster responses.
(1) Key figures related to insurance claims
As of June 6, the number of inquiries had reached 217,625, among which 186,400cases have been settled. So far, the total amount of claims paid is 272.4billion yen. The figures surpassed those of the Great Hanshin-Awaji Earthquake 1995 to become the second largest cause of claim payments for 'Earthquake Insurance on Dwelling Risks'.
(2) Specific measures
We have focused on four specific measures with understanding and cooperation from all relevant parties such as authorities that include the Financial Services Agency, the Kyushu Local Finance Bureau of the Ministry of Finance, local government offices and various media outlets, etc.
i. Customer inquiries
Based on the experience of the Great East Japan Earthquake, we began visiting local government offices in Kumamoto Prefecture soon after the quake. With their understanding and assistance, we distributed posters and leaflets in designated evacuation centers, offering information on insurance companies’ inquiry points and the 'General Insurance Contracts Inquiry System for Natural Disasters', which is designed to receive and handle inquiries about which insurers natural disaster insurance contracts are concluded with. We will enhance our measures to provide information for promptly paying out insurance claims.
ii. Damage investigation
For prompt payment of 'Earthquake Insurance on Dwelling Risks' claims, it is necessary to enhance on-site damage investigation systems. Thousands of our member companies’ employees are engaged in special responses such as setting up central commands, dispatching loss adjusters and organizing expert teams. As for cases that meet certain criteria, exceptional measures have been introduced including damage investigations based on customers' self-reports (through written forms, and without on-site investigations) and the omission of particular claim submission forms.
iii. Application of the grace period
In areas where the Disaster Relief Act has been invoked, our member companies have adopted an extension of the grace period up to a maximum of six months (until the end of October 2016) regarding the continuation of existing contracts and premium payments for motor and fire insurance.
iv. Offering relevant information
We have actively publicized our post-earthquake responses on our website. Given the heightened awareness following the quake, we are also providing information regarding coverage and the claim payment process of earthquake insurance through media such as newspapers, radio, and TV.
(3) Interim review
We settled 86% of received cases within a little less than two months of the quake. The lessons from the Great East Japan Earthquake, which we utilized on a series of operations from the reception of claim reports to payments, enabled us to reach this achievement. It can also be attributed to the endeavors of the whole general insurance industry including companies and agencies, who are determined once again to fulfil their missions to ensure swift claim payments and contribute to stabilizing people’s lives.
We remain committed to post-disaster responses to increase customer confidence in our industry.
3. Overview of 2015 fiscal year’s initiatives
(1) Priority measures
i. Awareness-raising and educational activities for consumers
To advocate the importance of self-help and mutual help effectively, we have conducted awareness-raising and educational activities for different age groups.
For elementary school pupils, we have promoted the ’Exploration for Disaster Prevention’ activities. A record 2,506 entries were submitted to the annual 'safety map-making campaign' from 588 groups, thanks to the support of the Cabinet Office, the Ministry of Education, Culture, Sports, Science and Technology, and the Independent Insurance Agents of Japan, Inc. This program received the 'Best Resilience Prize' at the Japan Resilience Awards 2016 for its purpose and effect in enhancing resilience to disasters.
For high school and university students, we provided 413 lectures (including lecture series) in order to deepen understanding of the risks they face in their daily lives and the usefulness of general insurance. We also implemented measures for general consumers and the elderly, including production of our booklet that offers tips on general insurance, and a total of 181 lectures across the country targeted at each age group.
On March 8, we held a symposium for university students marking the fifth anniversary of the Great East Japan Earthquake. Through this new approach, we encouraged young people to reaffirm the importance of disaster prevention and reduction. Among the participants, many university students wish to take part in disaster prevention and reduction activities. We will advance our initiatives for the next generations to lead local disaster prevention efforts and volunteer activities, through our leader-training program for the 'Exploration for Disaster Prevention' activities.
Utilizing our resources such as the 'Senior Conductor System' in which retired insurance professionals are assigned to awareness-raising activities for consumers, etc., we will boost our consumer-centric awareness-raising and educational activities.
ii. Promoting earthquake insurance
While the national earthquake insurance penetration rate is on average around 60%, the rate still differs greatly among prefectures. Therefore, this year we completed a series of public forums on 11 prefectures with low penetration rates, which we designated as priority regions. The forums offered lectures on quake risks at the local level and the usefulness of earthquake insurance.
According to questionnaires, the number of forum participants realizing earthquake risks at the local level doubled, accounting for around 90% of the total. Around 80% of uninsured participants indicated their willingness to apply for earthquake insurance. In conclusion, we recognize that we achieved our general goal for the forums.
Self-help measures to cope with earthquakes are essential for people’s lives in quake-prone Japan. Toward further promotion of earthquake insurance as a self-help tool, we will fulfil our social mission in cooperation with the Independent Insurance Agents of Japan, Inc., to disseminate the usefulness of it to the public.
iii. Disaster prevention and reduction that takes local characteristics into account
Large scale disasters have been more frequent and their types more diverse in recent years. There is an increased need for residents to understand the local characteristics of disasters in their neighborhoods. Therefore, we have conducted region-specific educational activities for disaster prevention and reduction in areas where the occurrence of large-scale disasters is of great concern or which have been affected by record damage. As concrete measures, we offered lectures and workshops highlighting region-specific disasters in Kyoto, Hiroshima, Tokushima, Kochi and Kumamoto Prefecture.
We will contribute to increasing the level of prevention at the local level through enhancing self-help and mutual help in closer cooperation with local municipalities.
(2)Other specific measures
i. Super-aging society
We promoted activities to prevent and reduce traffic accidents involving the elderly as important and urgent tasks, with an eye on the increasing number of such accidents. We stepped up our awareness-raising activities providing special new leaflets during the annual ‘road safety week’ in last autumn. We also undertook other measures to disseminate information on accident prevention and reduction such as an update of the maps of dangerous crossroads on our homepage.
Furthermore, we established a task force under the 'Customer's Voices and Experts Advisory Council'. Experts have compiled opinions based on a study of possible challenges and the roles that the industry should exercise amid Japan’s rapid transformation into a super-aging society.
ii. Emerging risks
Among technological innovation trends seen in a variety of fields, vigorous discussions are under way about self-driving cars. In the study group to which we invited external experts to be members, we proceeded with a technical and diversified study, considering expert views, business practices as well as legal precedents, to draw up the report ’Legal approaches to self-driving cars’. We will implement steps to improve the industry-wide business foundation, by researching the impact of practical applications of new technologies.
The development of international supervisory and regulatory standards for Global Systemically Important Insurers (G-SIIs) and Internationally Active Insurance Groups (IAIGs) is proceeding mainly by the efforts of the International Association of Insurance Supervisors (IAIS). We have actively made requests and proposals in the consultations regarding convergence of international standards and enhancement of financial stability.
In addition, we are undertaking measures to stimulate development of sound general insurance markets globally and to assist our member companies' operations abroad. We have worked on improvement of the financial infrastructure in Asia by holding annual ISJ (Insurance School (Non-Life) of Japan) general and advanced courses in Tokyo and overseas seminars, as well as offering support in the introduction of examination and training systems for insurance solicitors.
iv. Insurance crime
We continued to enhance our system infrastructure to eliminate false claims, in consideration of an increase in organized crime and the sophistication and complexity of insurance crime. We will expand the scope of the 'Insurance Claim History Information Sharing System', which is currently utilized for insurance products covering bodily injury, to all insurance lines. We will strive to maintain and improve a sound insurance system.
v. Establishment of new systems for insurance solicitation
By updating various guidelines and providing information through our member companies, we advanced our responses to enforcement of the revised Insurance Business Act on May 29, 2016. We will further collaborate with agents to establish proper solicitation systems, in order to make certain that the public have a high level of confidence in the insurance industry overall.
vi. Consumer consultations, complaints, and dispute settlement
We have strengthened the functions of the 'General Insurance ADR Center', which deals with consumer consultations, complaints, and dispute settlements. Based on the monitoring of consumer responses it provides, we introduced a new educational program for staff training. We also reinforced our dispute settlement system to in principle promote face-to-face interviews with consumers. By analyzing the consumer voices collected at the ADR Center and providing feedback to our member companies, we will continue to improve the industry-wide quality of insurance business administration to raise the level of the public's confidence in us.
vii. Tax reform petitions
In light of the frequent occurrence of natural catastrophes, improvement of the catastrophe reserve system is essential for insurers to fulfill their social mission of ensuring claim payments. In our tax reform petitions, we called for broadening the reserve system concerning fire insurance, etc., as a priority issue. The package of fiscal 2016 tax revisions allowed for the continuation of the current accumulation rate at 5%. The package also included a review of measures regarding anti-tax haven (CFC) rules, in which exemption criteria will be re-examined.
During the first year of the Seventh Mid-term Business Plan, we steadily moved forward with particular focus on the priority measures. I would like to express sincere gratitude for your warm support and cooperation, which I received during my one-year tenure.
Since the start of my tenure at the end of last June, many natural disasters have inflicted severe damage and losses across Japan, including Typhoon Goni (which raged throughout the Kyushu region) and Etau (which brought localized torrential downpours in the Kanto and the Tohoku region) as well as the Kumamoto Earthquake this April. We have prioritized the dissemination of the importance of self-help and mutual-help, taking the experiences of past large-scale disasters into account. Given recent circumstances, we recognize it is crucial to advance our efforts in this field.
We should reliably meet the needs of the times according to environmental changes including ‘the super-aging society’ and sophistication of Information and Communication Technology (ICT) as well as large-scale and more diverse natural disasters. We will intensify our efforts to support social stability and economic development and to help build a worry-free, safe society by offering various products and services. Your continued understanding and cooperation are both greatly appreciated.